Will Samsung Acquire BlackBerry Ltd. After All?

A report by the Financial Post claims that Samsung really is interested in acquiring BlackBerry Ltd. (TSX:BB)(Nasdaq:BBRY). So should you buy BlackBerry’s shares?

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Flash back to Wednesday of last week. A Reuters story claimed that Samsung Electronics Co. Ltd. was interested in buying BlackBerry Ltd. (TSX:BB)(Nasdaq:BBRY), and the two sides were negotiating a US$7.5 billion takeover. BlackBerry’s shares rose 30% in response, only to fall 18% the next morning when both companies denied the story.

But today, Financial Post is reporting that it has obtained a document, written by investment bank Evercore Partners Inc., that makes the case for a Samsung takeover of BlackBerry. The Post is also quoting an anonymous source, who claims that “Samsung is contemplating a purchase… It’s still being pursued right now. Samsung is still evaluating their options. So it’s still very much an open deal.”

So what’s really going on? And how should you react?

The case for Samsung to buy BlackBerry

This document makes an interesting case for Samsung to acquire BlackBerry. For starters, BlackBerry’s software products are “complementary to Samsung’s service platform.” So when combining the two companies, Samsung could go after enterprise clients more aggressively.

In fact, these two companies signed a collaborative deal back in November, in which BlackBerry would provide Mobile Device Management for Samsung devices that run the KNOX security suite. BlackBerry announced this deal as it launched BES 12. But Samsung’s market share among large enterprises remains relatively weak, and a takeover of BlackBerry might help.

The Evercore document also estimates that BlackBerry’s software revenue will reach US$636 million by 2017, which is US$400 million more than last year’s number. If this number is reached, then Samsung could get excellent value from an acquisition.

Not so fast

That being said, Samsung should take Evercore’s advice with a grain of salt. After all, Evercore could make a lot of money if Samsung takes over BlackBerry. Remember, real estate agents will always advise you to buy a new home.

And there are some big reasons why Samsung should leave BlackBerry alone. First of all, these kinds of mergers are difficult to pull off. Just look at what happened when Google bought Motorola.

Also, Samsung has plenty of other ways to team up with BlackBerry. For example, it could acquire a minority stake. It could also continue to sign partnership deals. Either of these options would be far cheaper than an outright purchase, and result in far fewer headaches too. After all, if Apple can team up with an old foe like IBM, why can’t Samsung partner with BlackBerry?

So should you buy the shares?

So is BlackBerry worth buying? After all, you can make big gains if you get the timing right — Talisman Energy Inc. and Osisko Mining come to mind, both of which were bought out last year.

But this is a very difficult game to play, and can end badly if you’re unlucky. For that reason alone, I would advise staying on the sidelines.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned. David Gardner owns shares of Apple, Google (A shares), and Google (C shares). Tom Gardner owns shares of Google (A shares) and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and International Business Machines.

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