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."
- see this Globe and Mail article
- see this AllThingsD article
- see this ZDNet article
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