Shares in Waterloo, Ont.-based BlackBerry jumped 8.6 per cent on the Toronto Stock Exchange Monday after a published report suggested Chinese computer firm Lenovo was preparing to make a bid for all or part of the company.
BlackBerry shares were changing hands at $11.63, up 93 cents on the TSX at the close Monday, up almost seven per cent from Friday's close. The catalyst appears to be a report from technology news website Benzinga that says — citing unnamed sources close to the negotiations — that Chinese computer company Lenovo is preparing to launch an offer for BlackBerry of about $15 per share as early as this week.
Lenovo, best known by consumers as the company that bought IBM's desktop business and turned it into the largest seller of computers on the globe, was interested in buying BlackBerry in 2013, but the deal fell apart when the latter approached the federal government to ask if it would approve such a transaction and received a resounding no on national security grounds.
Net benefit test
Under federal rules, any purchase of a Canadian asset worth more than $331 million is subject to approval by Ottawa under Industry Canada rules, including the so-called "net benefit" test that requires the deal be deemed good for Canada's economy. It's the clause that was invoked when Ottawa stepped in to scuttle the foreign takeover of the Potash Corporation of Saskatchewan, which would have been the biggest takeover in Canadian history.
Corporate officials aren't talking, but at least one technology analyst says the deal could make sense.
"Lenovo is serious about becoming a worldwide player," Bob O'Donnell, chief analyst at TECHnalysis Research told CBC News in an interview. "People want an answer to iOS or Android and there is BlackBerry with BB10."
O'Donnell said any rumour of a sale, even if specious, is a result of some smart moves on Chen’s part.
"Turning around something that a lot of people thought was dead into something that was good enough to sell even pieces is in fact a victory of sorts," he told CBC's The Exchange with Amanda Lang.
Lenovo already has a share of the smartphone market in Asia, but a purchase of all or part of BlackBerry would give them a new cachet and larger playing field, he said. "They're a huge player in phones in China and Southeast Asia," he said. "Buying QNX and [BlackBerry's] security stuff would be huge for them."
Lenovo recently bought the Motorola handset business from Google, for example. "They have their targets set high," O'Donnell said.