Research in Motion (NASDAQ:
) shares continued to rally on Friday morning, gaining about
another 2 percent. Canada's Finance Minister Jim Flaherty said
that the Canadian government would look "carefully" at a tie-up
between RIM and Lenovo.
Although he did not dismiss a possible sale outright, he said
that some technologies were completely off limits to overseas
buyers, according to Bloomberg.
Lenovo's CFO said Thursday that the company was looking at
acquiring RIM as an option to boost its mobile business. Lenovo
is the world's second largest PC maker, but as PC sales have
experienced a secular decline, the company has been looking to
shift into mobile.
If Lenovo wants to acquire RIM, the Canadian government will
have to approve. In the past, Canada has blocked deals that would
see its companies sold to non-Canadians. Notably, Canada blocked
BHP Billiton's (NYSE:
) takeover attempt of Potash (NYSE:
) in 2010.
However, in December, the Canadian government approved the
acquisition of Nexen by a Chinese company -- so perhaps Canada
would approve of another Chinese company (Lenovo) buying all, or
part of, RIM.
RIM has already shed about 7000 employees over the last two
years. If BlackBerry 10 fails to meet early expectations, it
might be better for Canada to let RIM be sold than lose even more
jobs should the company collapse.
In May of last year, RIM hired J.P. Morgan (NYSE:
) and RBC Capital to help it review its strategic options,
including a sale of the company. RIM then turned its focus to
accelerating the development of BB10, reportedly asking its
employees to put in six-day work weeks and limit vacation
But BB10 raises further questions: If BB10 does well
initially, then why would RIM want to sell itself? If it doesn't,
why would anyone want to buy the company?
Is Lenovo the most likely acquirer? The company, by its own
admission, does face longer-term challenges as consumers shift
away from its bread and butter PCs. But why buy RIM when Lenovo
could simply embrace Google's (NASDAQ:
) Android or Microsoft's (NASDAQ:
) Windows Phone 8?
Rather than a Chinese company, perhaps investors should look
Japan's Softbank bought a 70 percent stake in U.S. telecom
giant Sprint (NYSE:
) last year. Hedge fund manager Kyle Bass, known for his bearish
views on Japan, told CNBC's viewers to expect more acquisitions
by Japanese companies. As the yen continues to weaken -- and
there is widespread speculation that it will weaken further -- it
becomes attractive for Japanese companies to use their yen
reserves to acquire foreign assets, in this case RIM.
Perhaps some Japanese tech company would have interest in
RIM's technology. Or perhaps Softbank would go one step further,
acquiring RIM as a way to bolster its Sprint investment.
Shares of RIM traded near $18 Friday.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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