RIM shares surge on takeover rumour
Shares In Research in Motion had their largest single-day gain in more than two years on Wednesday as a report suggested cellular carrier Vodafone may be interested in the company.
The Wall Street Journal's market blog reported Wednesday on speculation that London-based Vodafone might purchase the smartphone maker.
RIM shares ended the day up more than 10 per cent at $24.49 a share on the TSX.
In the last week, RIM stock has been moved by chatter that it was exploring "strategic options" for the company and seeking the advice of investment bankers. After that, activist investor Carl Icahn was rumoured to have taken a significant stake.
Rumours of a takeover by Microsoft and Oracle have been circulating for years. No concrete offers have materialized.
"In terms of rumoured takeover partners, you could throw a dart and come up with a list of names," Northern Securities analyst Sameet Kanade said.
RIM had no immediate comment in reaction to the rumours Wednesday. Vodafone also had no comment on the report.
Analysts poured cold water on the possibility of a takeover for the Waterloo, Ont.-based technology titan.
"On the one hand, we must admit RIM is today a bargain in many respects, and we can imagine new directions to get the company out of its current corner," Sanford C. Bernstein Pierre Ferragu said in a research note. "On the other hand, we don't see any likely buyer out there, and a change in strategy or management is unlikely."
Before Wednesday's trading, RIM had seen its share price tumble by more than 70 per cent in the last 12 months.
Kanade says he doubts Vodafone or any other carrier is an ideal dance partner for RIM, because that would tie their hands in trying to offer other phones on their network.
"A potential acquirer is likely to be North American, just because of all the support RIM has from governments here," Kanade said. "Washington is unlikely to want to see them fall into the hands of a European or Asian company, just because of the security issues."
And with a price tag of $15 billion in this economic climate, he doubts any suitor exists. "It would have to be a friendly acquisition, to avoid paying too much of a premium, and that goes against all the pronouncements of [RIM co-CEOs Jim Balsillie and Mike Lazaridis] who are under the impression than QNX is going to be their saviour," Kanade says.
He has a price target of $18 US for RIM shares.