In the recent past, there have been reports of an offer that has been made by Samsung to acquire BlackBerry for a whopping $7.5 billion. This has been in the wake of market battles with Apple according to reports by Reuters. The Korea based company is believed to have made an offer of for the company shares ranging between $13.35 and $15.49. Based on Blackberry’s present-day trading value, this represented a premium of 38percent to 60percent.
At the moment, the transaction has not gone public. However, company representatives from both sides have been meeting over what seems like a possible transaction taking place in the near future. One of the parties, BlackBerry, apparently has been found to refute such claims and reiterates that no such discussions have been held over a possible acquisition of the company by Samsung. Following the coverage of the news by Reuters, BlackBerry shares realized about 30 percent increase before they dropped significantly by 15percent moments later. There were also reports from the other party, Samsung affirming the position held by BlackBerry about the said transaction. According to Reuters, Samsung denied those claims alleging that the media reports were unsubstantiated.
It didn’t stop there. On Wednesday January 14, 2015, BlackBerry seemed to consolidate its company by coming up with a new strategy to revamp its business and avoid the possible takeover by Samsung according to a Canadian newspaper, Globe and Mail. The offer of $7.5 billion was believed to be much lower than the company’s potential asset worth as projected in the future. The Chief Executive of Blackberry, John Chen is taking his feet firmly to the ground to win over the market lost to such companies like Samsung, Google Inc and Apple Inc. Having led the way into the smartphones technology, Blackberry’s management is highly persuaded that the acquisition by Samsung is not the way to go.
Market Dynamics
BlackBerry is having a major turning point. Therefore, any developments in the company have been placed in the future. For Samsung, analysts like Brian Colello of the Morningstar believe that the company is eyeing BlackBerry’s unbounded hope in the future. Samsung’s drive in the market is the development of smartphones for the consumer. This niche has gradually been populated in recent times. For this reason, Samsung sees a greater potential in acquiring BlackBerry business as it plans to warm up for the corporate market where it has lagged behind its rivals.
With the challenges that Samsung is facing in the corporate market, any success would require some input from great investors like Prem Watsa who has major shares in BlackBerry through his Fairfax Financial Holdings Ltd company. There are many ties that need to be broken before Samsung can acquire BlackBerry including a regulatory scrutiny between the two countries linked with the companies. The secure networks of BlackBerry manage many email traffic of different customers, the government and military organizations universally. With that said, any possible acquisition can only be mere speculations by now. However, we can only wait and see the turnout of events.
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BlackBerry,
Samsung
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