BlackBerry (BBRY) Fields New Buyout Offers, Faces Shareholder Lawsuits

Jacob Harper |

BlackBerry (BBRY) née Research in Motion Ltd. is both fielding buyout offers from Cisco Systems Inc. (CSCO) , Google Inc. (GOOG) and SAP Ventures to buy all or parts of the company. This follows the diminishing possibility that Fairfax Financial Holdings would buy the company at $9 a share for $4.7 billion, a deal that was contingent on finding investment partners that look likely not to materialize.  

Concomitantly, the Canadian smartphone maker is facing a class-action lawsuit alleging the company misled investors about how well the Z10 would do. That phone, introduced in January, has been a massive failure and looks to be the final nail in the coffin for BlackBerry.

Buyout Rumors Swirl around BlackBerry



With the market deeming Fairfax’s tender offer too high (the stock has not come close to $9 a share since the offer) new buyers looking to buy into BlackBerry have emerged. If the company is split, there are still attractive and potentially profitable components to be had. Its messenger service is especially prized, and is seen as having major potential in developing markets. BlackBerry also holds patents that could be useful to other larger tech companies.

If Google or Samsung end up being the buyer, there stands a good chance either would strip, dismantle, and then kill off BlackBerry. Google already has a hardware line with Motorola and Samsung is the largest smartphone maker in the world, and has little use for BlackBerry aside from eliminating a competitor.

Cisco would be an interesting buyer, as the tech company has so far avoided the smartphone market but has the capital to make a major play, and could use BlackBerry’s enterprise division. SAP, like Fairfax, would probably take the company private to retool, or sell it off in components.     

Shareholder Lawsuit Alleges Misleading Projections

Meanwhile, a class-action lawsuit representing all shareholders who bought into BlackBerry between Sept 27. 2012 and Sept 20, 2013, alleging the company acted as if the 10 smartphone line would be a hit while concealing information that the product’s success was far from certain, and that the company had “deceive(d) the investing public.

The complaint alleges that while the company assured investors progress was being made and the 10 line was getting good marks, "In reality, the BlackBerry 10 was not well received by the market, and the company was forced to … lay off approximately 4,500 employees, totaling approximately 40% of its total workforce.”

BlackBerry jumped 4.29 percent on the day amid renewed buyer interest to hit $8.02 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CSCO Cisco Systems Inc. 30.12 0.14 0.45 12,312,598
GOOG Alphabet Inc. 804.31 2.14 0.27 995,380
BBRY BlackBerry Limited 7.15 0.05 0.67 1,232,495
PSNX PureSnax International Inc 0.00 0.00 6.98 3,067,861

Comments

Emerging Growth

Altair Resources Inc.

Altair Resources Inc, formerly Altair Gold Inc acquires, explores and develops mineral properties in Canada. The Company is in the process of exploring its mineral properties.

Private Markets

8tracks

Our mission is to be the best place for people who care about music to create and discover thoughtfully curated playlists. In essence, 8tracks is a platform for online mixtapes.

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…