Canadian security vendor Certicom went to court Dec. 22 seeking an injunction to block the $1.50 a share hostile takeover bid made by a wholly-owned subsidiary of BlackBerry maker RIM (Research in Motion). Certicom, of Mississauga, Ontario, develops elliptic curve cryptography technology coveted by RIM.
In its application to the court, Certicom said that RIM's access to Certicom's confidential information and its use of that information in connection with RIM's approximately $52 million bid violates non-disclosure agreements signed by RIM in 2007 and 2008 with Certicom.
Access to this inside information, Certicom claims, also provided RIM with significant information and a timing advantage over other parties that may have an interest in entering into an alternative transaction. Certicom contends RIM has not disclosed to Certicom shareholders that it has had the benefit of evaluating Certicom's confidential information and used that information in making its offer.
"Among other things, the board found that, at $1.50 per share, the RIM offer does not provide fair value for Certicom's cash on hand and the significant potential tax assets that could be available to a taxable Canadian corporation -- such as RIM," Certicom stated in a circular to shareholders. "Further, RIM's hostile bid undervalues both Certicom's valuable and unique industry-leading data encryption technology and the recent progress the company has made in implementing its strategic plan."
The Certicom circular to shareholders also notes that the board is continuing to conduct a value maximization process designed to facilitate other proposals from qualified third parties. Certicom has established a data room to provide confidential information to bona fide interested parties and has signed non-disclosure and standstill agreements with a number of those parties.
"Your board of directors has established a Special Committee of independent directors that has engaged financial and legal advisors to consider the RIM offer," Certicom said in a letter to shareholders. "After a thorough review, the special committee and the board have unanimously determined that the RIM offer is inadequate and not in your best interests."
Certicom warned shareholders that are tempted tender their shares to the RIM would lose the opportunity to benefit from Certicom's near- and long-term growth prospects. "As a result, the board of directors is convinced that continuing to hold Certicom shares provides better potential shareholder value and is far preferable to accepting RIM's undervalued offer," Certicom stated.
Certicom manages and secures the value of content, applications and devices with government approved security. Adopted by the National Security Agency (NSA) for government communications, elliptic curve cryptography provides the most security per bit of any known public-key scheme.