Blackberry (BBRY) to Acquire Good Technology for $425M

Shares of Blackberry Ltd (BBRY) were trading up +0.22 or +3.02 percent to $7.50 per share in Tuesday's premarket after the company announced Friday that it had entered into a definitive agreement to acquire rival company Good Technology for $425 million in cash. Blackberry stock closed at $7.28, down -0.18 or -2.41 percent in Friday's regular trading session.

Waterloo, Ontario based BlackBerry Ltd, originally known as Research In Motion Ltd is a Canadian wireless equipment and telecommunications company best known for developing the BlackBerry brand of smartphones and tablets.
The company had been having severe setbacks due in large part to competition from the Apple AAPL iPhone and Samsung SMSN Galaxy smartphones, which have taken a large share of the smartphone market. According to four separate sources familiar with the matter, the company is considering the Android operating system after its new line of smartphones has failed to appeal to the masses.

Sunnyvale, California based Good Technology provides mobile security to companies all over the world in the areas of energy, healthcare, financial services, government, legal and manufacturing. Among the company's 6,200 clients are all the governments of the G7, the world's 10 largest banks and aerospace and defense contractors. Good Technology has offices in the UK, Spain, China, Germany, Sweden, Australia, Italy, South Korea and Benelux, as well as offices in New Jersey, Texas, Washington and New York.

The Good acquisition will allow Blackberry to offer its customers a complete end to end solution for its clients' mobile enterprise, spanning all platforms. With Good's technology ⢬" which is already embedded in the mobility infrastructure of governments worldwide ¢¢¬" Blackberry will be able to offer a unified secure mobile platform with apps for any mobile device running any operating system.

John Chen, BlackBerry Executive Chairman and Chief Executive Officer said in the company's press release that, "By acquiring Good, BlackBerry will better solve one of the biggest struggles for CIOs today, especially those in regulated industries: securely managing devices across any platform. By providing even stronger cross-platform capabilities our customers will not have to compromise on their choice of operating systems, deployment models or any level of privacy and security. Like BlackBerry, Good has a very strong presence in enterprises and governments around the world and, with this transaction, BlackBerry will enhance its sales and distribution capabilities and further grow its enterprise software revenue stream."

The transaction is expected to be completed by the end of Blackberry's 2016 fiscal third quarter and is subject to the customary regulatory and other closing conditions. The company expects to realize about $160 million in GAAP revenue from Good in the first year, including the impact of a write-down of some of Good's deferred revenue.

Analysts feel generally positive on the acquisition, although some believe that Blackberry could be challenged in selling EMM subscriptions in addition to value added services. The acquisition will help Blackberry in closing additional licensing deals in addition to the two deals announced in the last quarter. For the most part, analysts are of the opinion that the merger will lead to better, more advanced products and expand Blackberry's customer base.

Blackberry stock opened higher on Friday after the news release, nevertheless, the stock closed down more than two percent due to overall market weakness. In this morning's premarket, the stock has already recovered its Friday loss and could possibly continue gaining after the market opens on the news.

Other News About BBRY

BlackBerry Bulks Up as Sale Looks Less Likely

According to Barrons, the Good acquisition is strategic, due to the fact that a potential sale of Blackberry may not be feasible in the near term.

T-Mobile Looking to Win Over BlackBerry Customers

T-Mobile is wooing Blackberry customers after having ended its relationship with the company in 2014.

Other Stocks in the News

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Published on Sep 8, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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