Shares in BlackBerry Ltd. whipsawed late Wednesday, surging on a report that South Korean conglomerate Samsung Electronics Co. had approached the Canadian smartphone pioneer with a takeover proposal — then tumbling after BlackBerry denied that talks had taken place.
The stock jumped by nearly 30 per cent after Reuters said executives from the two companies — working with advisers — met last week to discuss an offer from Samsung with an initial price range of $13.35 to $15.49 (U.S.) per share.
At the high end, that would value BlackBerry at about $7.1 billion after subtracting net cash, or 24 times its trailing 12-month earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg.
“That’s a lot of money for a company with about 1-per-cent market share in the U.S.,” Roger Entner, an analyst with Recon Analytics in Dedham, Mass., told Bloomberg.
“God bless them if they’re getting that, but that’s a lot of money for a company that’s not going anywhere.”
BlackBerry shares dropped by more than 10 per cent in extended New York trading to $11.24 after the Waterloo-based company said in a statement that it “has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry.” It declined further comment.
The takeover price reported would represent a premium of as much as 60 per cent over BlackBerry’s closing value Tuesday, or about $7.5 billion including $1.25 billion in convertible debt. BlackBerry shares rose after the report to end regular trading in New York at $12.59.
Reuters said Samsung is interested in BlackBerry’s trove of technology patents and wants to bolster its enterprise security credentials.
BlackBerry and Samsung announced an enterprise partnership in November that weds BlackBerry’s security platform with Samsung’s own security software for its Galaxy devices.
It remains unclear whether Ottawa would approve the sale of BlackBerry to a foreign company. Canada reviews foreign takeovers valued at more than $354 million to determine if they provide a “net benefit” to the country.
The government can also scrutinize deals based on national security considerations.