Samsung RIM Takeover Rumor Shot Down After BlackBerry Maker's Shares Spike 10 Per Cent
A U.S.-based technology blog has reported that South Korean electronics giant Samsung is a leading contender to buy some or all of struggling BlackBerry maker Research In Motion, but the price may be too high.
The Boy Genius Report said Tuesday that RIM's co-CEO Jim Balsillie is meeting with prospective buyers and is especially interested in Samsung.
"Jim is going hard after Samsung," the influential tech blog said. "One of the reasons no deal has been struck, however, is that RIM’s co-CEOs are asking for way too much."
As with previous reports of other companies taking a look at RIM's assets, the company didn't comment on the Boy Genius report. A Samsung spokesman said later that the South Korean company hadn't been approached by RIM and wasn't interested in buying it.
Boy Genius said the Waterloo, Ont., company is likely looking for a sale price of between $12 billion and $15 billion, or between $22.90 and $28.60 per share.
RIM's current market capitalization is about $8.5 billion.
The Canadian tech company has been the target of takeover talk for months, with Samsung mentioned previously as a potential buyer.
RIM's stock has lost some 75 per cent of its value over the past year amid faltering smartphone and tablet sales in the important U.S. market.
But the latest news made shares in Research In Motion (TSX:RIM) bounce up 5.3 per cent, or 90 cents, to $17.76 at the close of trading Tuesday on the Toronto Stock Exchange.
In extended trading after the close, however, RIM's stock gave up most of its gains after Thomson Reuters reported that a spokesman for the South Korean company said Samsung wasn't interested in buying RIM and hadn't been approached by Research In Motion.
RIM shares dropped 97 cents to US$16.50 as of Tuesday evening. It had risen US$1.30 to close at US$17.47 at the end of regular trading on the Nasdaq market.
The Boy Genius Report said one of RIM's biggest assets is its BlackBerry Messenger instant texting service, which would help Samsung to differentiate itself from Google's Android operating system used by Samsung smartphones.
The tech blog also said that Balsillie is meeting with almost every company that might be interested in either a part or all of RIM, in addition to having talks about licensing its technology to other companies.
Telecom analyst Anil Doradla said Samsung would be an ideal fit, but he doesn't see any reason for the electronics giant to rush into buying RIM because the market value of the BlackBerry smartphone could fall even further.
"Is this what RIM is actively seeking or is this what Samsung is actively seeking? That's the key question," said Doradla of Chicago-based William Blair & Co.
If RIM is pursuing Samsung, then Balsillie isn't coming at it from a "position of strength," Doradla said.
Doradla said Samsung would be a "perfect" fit because it doesn't own the hardware or software it uses in its mobile phones.
"They just go after the best in the market," he said. "They have deep pockets. They mass produce in very short times."
Doradla has criticized RIM in the past for not being able to get new smartphones out fast enough to meet the demands of tech-savvy U.S. consumers. Recent reports have pegged RIM's share of the U.S. market at less than 10 per cent.
RIM has said it won't have its new generation of BlackBerry smartphones out until later this year, leaving it with its existing BlackBerrys to sell until then and counting on strong international sales to make up for lost ground in North America.
Samsung would be able to differentiate itself a bit more with the help of RIM's technology and take on Apple's iPhone a bit more, Doradla said. Samsung is also having patent infringement issues with Apple, he added.
The two companies could also form a "strategic partnership" or having licensing agreements if there's no sale, he said.
"Samsung will clearly benefit from RIM's technology."
RIM produces a complete smartphone with its own hardware, software, operating system and applications such as the BlackBerry Messenger Service. While this has been an advantage for RIM in the past, it's now in danger of being left behind as software developers and other innovators concentrate on products that enhance or advance Apple or Android technolgoy.
Shares in the BlackBerry maker shot up last week on news the company had hired investment banker Goldman Sachs to explore its strategic options.
There have been reports of other potential suitors such as software giant Microsoft and online retailer Amazon, which sells the Kindle e-reader and the Fire tablet.
Many investors hold RIM founders Jim Balsillie and Mike Lazaridis responsible for the company's problems and have called for an independent board chairman and for the two men to be replaced as co-CEOs and also for the company to be sold or broken up.
Any potential sale to a foreign company such as Samsung would likely result in a review by the federal government to determine whether such a sale would have a net benefit to Canadians.