Lenovo, the world's top-selling PC maker, is among the companies now considering a bid for all or part of the beleaguered BlackBerry.
The China-based Lenovo signed a nondisclosure deal to examine BlackBerry's books, Reuters reported Oct. 17, citing a source familiar with the matter.
Lenovo, known in the West solely as a PC maker, is a leading smartphone maker in China, where local brands dominate. While Korea-based Samsung is currently the top seller, both globally and in what's now the world's largest smartphone market, analysts expect Lenovo to overtake Samsung in China. Buying BlackBerry could give Lenovo a foothold to expand beyond the East—something it has said it's interested in.
Roger Kay, principal analyst with Endpoint Technologies, says such a deal is unnecessary.
"BlackBerry is an also-ran platform right now. Lenovo doesn't need to take on all the baggage and investment to then break its teeth on Android and iOS," Kay told eWEEK. "And if not them, Windows Phone. Why buy the fourth platform, which is in decline, and try to shore it up? Sand through their fingers."
BlackBerry on the Market
BlackBerry, after an extensive strategic review by third parties, and a lukewarm global response to its long-coming BlackBerry 10 platform and smartphones, announced Aug. 12 that it is open to "strategic alternatives," which CEO Thorsten Heins said could include "possible joint ventures, strategic partnerships or alliances, a sale of the company or other possible transactions."
After several quiet weeks, BlackBerry announced Sept. 23 that it had signed a letter of intent (LOI) with Fairfax Financial Holdings, its largest shareholder, for a deal worth $4.7 billion. Under the terms of the LOI, Fairfax has until Nov. 4 to perform due diligence, and until that time, BlackBerry is open to courting other buyers.
It's been reported that Google, Samsung, SAP and Cisco have all expressed interest in buying parts of BlackBerry, though none of them have made a formal gesture (at least not one that has gone public).
BlackBerry co-founders Mike Lazaridis and Douglas Fregin have also shown interest in reacquiring the company they helped build into a one-time smartphone market leader and the company that made mobile email mainstream and a mainstay of professionals.
On Oct. 8, Lazaridis and Fregin filed a document with the Securities and Exchange Commission, stating they're "considering all available options with respect to ... a potential acquisition" of all the outstanding shares of BlackBerry that they don't already own.
No Easy Deal for Lenovo
Were Lenovo to pursue a deal to buy BlackBerry, it would "be certain to face government scrutiny in both Canada and the U.S.," The Wall Street Journal reported Oct. 18, pointing out that the U.S. Department of Defense currently supports approximately 500,000 BlackBerry smartphones, and that many U.S. federal and state employees, as well as President Obama, are BlackBerry users.
The Journal added the deal would likely also undergo review by the Committee on Foreign Investment in the U.S.
Working to Lenovo's advantage is the fact that it's a known entity to the U.S. It has operations, research and sales headquarters in North Carolina, where this year it also opened a manufacturing facility. Additionally, in 2005, the U.S. approved Lenovo's purchase of IBM for $1.25 billion, which, at the time, was one of the largest acquisitions of a U.S. company by a Chinese company.
In January of this year, Lenovo Chief Financial Officer Wong Wai Ming made headlines when he told Bloomberg that Lenovo is "looking at all opportunities, RIM and many others." (In January, the company officially changed its name from Research In Motion (RIM) to the name of its popular handset, BlackBerry.)
Lenovo later back-pedaled from the comment, saying in a statement that the quote had been taken out of context.