According to a new Reuters report, Samsung recently approached BlackBerry (NASDAQ:BBRY) to buy the company for up to $7.5 billion, a figure that represented a 60 percent premium on BlackBerry's shares. Samsung was mainly interested in BlackBerry's patent portfolio, according to the report.
Following the report, BlackBerry's shares jumped almost 30 percent, to around $12.60 per share.
Shortly after Reuters released its article, however, BlackBerry issued a statement that it is not in discussions with Samsung. "BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry," the company said. "BlackBerry's policy is not to comment on rumors or speculation, and accordingly it does not intend to comment further."
Samsung too denied it is in talks with BlackBerry: "Media reports of the acquisition are groundless," the company said, according to the Wall Street Journal.
BlackBerry's shares have since cooled following BlackBerry's and Samsung's denial of talks.
According to the initial Reuters article, which cited "a person familiar with the matter and documents seen by Reuters," executives from Samsung and BlackBerry met last week to discuss the potential transaction. The report noted that both companies are working with advisers on a possible deal. Samsung proposed a purchase price of between $13.35 to $15.49 per share--a premium of 38 percent to 60 percent over BlackBerry's trading price, Reuters said.
Although the overall value of BlackBerry's patents is unclear, BlackBerry was a leading figure in the smartphone industry prior to the launch of Apple's (NASDAQ: AAPL) iPhone, and likely has a significant array of patents as a result. And patents in general continue to be a valuable item in the wireless industry--for example, the Rockstar consortium headed by Apple paid $4.5 billion in 2011 for the patents of bankrupt Nortel Networks.
In a note to investors, Wells Fargo analysts said the value of BlackBerry's patent portfolio likely would be $2.77 per share in a sale.
This is not the first time BlackBerry has been targeted in M&A speculation. Following the failure of the company's BlackBerry 10 devices, rumors pegged Lenovo as interested in a merger with BlackBerry. However, as recently as December, BlackBerry CEO John Chen said even if a Chinese smartphone maker offered to buy the company, Western governments likely wouldn't allow it because of BlackBerry's deployment of mobile security software for those governments.
It's unlikely that South Korea's Samsung would face similar concerns. Already Samsung is working to expand sales of its devices to corporate and government customers.
Moreover, BlackBerry in November inked a major agreement with Samsung to enhance security on Samsung's Android phones. Concurrently, Samsung said it will resell the BlackBerry Enterprise Service 12 platform to its customers.
BlackBerry reported a narrower net loss for its fiscal third quarter and said it continues to expect to achieve profitability sometime in its next fiscal year. Since taking over BlackBerry, CEO Chen has been working to focus the company on the enterprise sector. The company continues to sell smartphones, though its market share is dwindling into almost nothing.
A purchase of BlackBerry by Samsung would be the latest mega-merger in the smartphone and handset space. Most recently, Microsoft (NASDAQ: MSFT) acquired the smartphone business of Nokia (NYSE:NOK) for roughly $7.2 billion in a deal that closed last year. Google (NASDAQ: GOOG) in 2011 said it would purchase Motorola for $12.5 billion, partially for Motorola's patent portfolio. Last year, China's Lenovo purchased Motorola from Google for $2.91 billion, though Google retained much of Motorola's patent portfolio.
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Article updated Jan. 15 to include Samsung's comments.