Saturday, September 19

Is Lenovo a potential suitor for BlackBerry?

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A very interesting story broke in France yesterday in their press. Lenovo CEO Yang Yuanqing told Les Echos that he is open to acquiring BlackBerry. BlackBerry has been mentioned as an acquisition target by half a dozen companies in the last 12 months. Yet, the Ontario based company is still a private company owned by shareholders.

There are potentially a few snags that might end this rumor from becoming reality. One, the acquisition would need regulatory approval from the Canadian government. The government automatically reviews all foreign takeovers of companies with asset values of more than $335 million (give or take R3 billion in Rand terms) to determine whether the transactions are of “net benefit” to the country. The deal might ensure the long term future for all the Canadians who are employed by BlackBerry, so unions could potentially play a role with the government. It is clear that BlackBerry is currently battling Nokia for the third spot in global mobile business as Android and Apple have taken the top spots.

Lenovo’s CEO did not rule out buying the company. It “could possibly make sense, but first I need to analyze the market and understand what exactly the importance of this company is.” These words mentioned in the press ensured that the share price of BlackBerry improved for the first time in a very long time. So the market is clearly thinking this is potentially a good deal between Lenovo and BlackBerry, if it happens. I think Yuanqing is also taking a wait-and-see approach to see how successful the new Z10 and Q10 is.

What does BlackBerry bring to Lenovo if the acquisition takes place?

  • A global mobile footprint and not just focused on a few regions. Lenovo has a cellphone business in Asia but has lost significant market share to rivals ZTE and Huawei.
  • BlackBerry would give Lenovo a foot in the door with corporates and enterprises. Lenovo ThinkPad Notebooks are widely seen in meeting rooms across the world, yet Lenovo has not gotten into a position like Microsoft who makes billions annually via enterprise solutions. Mobile mail linked with a corporate Lenovo notebook makes Lenovo a serious enterprise player.
  • Lenovo could then also licence BlackBerry Z10 (the operating system found on the Z10) from the BlackBerry holding to use on their own devices. That will be a huge gain for Lenovo.

I have taken note that Thorsten Heins has been very quiet since the launch of BlackBerry 10. He dismissed a similar rumour in January when BlackBerry was a rumoured acquisition target. If I were the Lenovo CEO I would, after doing due diligence on BlackBerry’s business, make contact with BlackBerry shareholders as they could potentially be the swing vote if an acquisition is to occur.  So who is next to buy BlackBerry? A certain Redmond based behemoth or will BlackBerry stay private?

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