Report: Lenovo wanted to bid for BlackBerry, but Canadian government signaled opposition

Chinese PC and smartphone maker Lenovo did pursue a bid for BlackBerry (NASDAQ:BBRY), but the Canadian government effectively quashed any chance of a takeover by indicating to BlackBerry it would block the deal because of national security concerns, according to a Globe and Mail report.

The report, citing unnamed sources, said that the government made clear to BlackBerry over the last month or two that it would not approve a Chinese company buying a company so deeply intertwined with the country's network infrastructure. As a result of those indications, and the prospect of being tied up for months in a national security review, BlackBerry never even formally proposed a scenario involving a Lenovo takeover, the report said.

Under the Investment Canada Act, the Canadian government can veto any foreign takeover of a Canadian asset or company if it deems such a deal would not bring a "net benefit" to the country, or if it thinks national security might be threatened.

BlackBerry announced Monday it halted its plans to go private in a $4.7 billion deal led by Fairfax Financial Holdings, its largest shareholder, and will instead receive $1 billion in financing from Fairfax and other institutional investors.

Last month the Wall Street Journal reported that, according to unnamed sources, Lenovo was actively considering purchasing all of BlackBerry, and that Lenovo signed a non-disclosure agreement that gave it access to BlackBerry's books.

BlackBerry declined to comment, according to ZDNet. A Canadian government official, speaking on condition of anonymity to the Globe and Mail, cautioned against reading an anti-Chinese policy into the BlackBerry matter. "I don't think anybody should be surprised that we would have concerns like that," the official said. "We have been pretty consistent that the message is Canada is open to foreign investment and investment from China in particular but not at the cost of compromising national security."

Last fall the Canadian government signaled that Chinese gear maker Huawei would be blocked from participating in the construction of a new secure telecommunications network in Canada.

Lenovo was the world's No.4 smartphone maker in the third quarter, according to IDC. Lenovo CEO Yang Yuanqing said in August he thought organic growth was enough to keep the momentum going in the company's smartphone business, but he did not rule out acquisitions.

BlackBerry is considered a prized asset within Canada, not only for its technology legacy but because of its operation of a secure data network throughout the world.

As it stands with BlackBerry, the company has turned former Sybase CEO John Chen to turn around its struggling business as its interim CEO. Chen has vowed not to axe the company's handset business and said this week that BlackBerry has "enough ingredients to build a long-term sustainable business."

For more:
- see this Globe and Mail article
- see this AllThingsD article
- see this ZDNet article

Related Articles:
Interim BlackBerry CEO Chen has turnaround experience, but faces challenges
BlackBerry halts sale process, gets $1B investment and ousts CEO Heins
Analysts: Huawei booms to No. 3 worldwide smartphone maker with P6, G610 success
Report: Lenovo looking at potential BlackBerry bid
Lenovo reports strong smartphones, tablet sales, stays coy on BlackBerry purchase

Sponsored by ADI

What if we were never truly alone? Our next-gen communications technology can help people in even the most remote places stay connected.

What if there were no ocean, desert, mountain or event that could ever keep us from telling our stories, sharing discoveries or asking for help? ADI’s next-gen communications technology could keep all of us connected.

Suggested Articles

Mint Mobile, the MVNO made famous by actor Ryan Reynolds, expanded its partnership with Best Buy.

AT&T has largely failed to make its case for its competitive advantage in 5G, resulting in a marketing void.

Dish will deploy Mavenir's RCS Business Messaging software for customer support services.