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.
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 âÃƒÂƒÃ‚Â‚ÃƒÂ‚Ã‚Â¢ÃƒÂƒÃ‚Â‚ÃƒÂ‚Ã‚Â¬" which is already embedded in the mobility infrastructure of governments worldwide ÃƒÂƒÃ‚Â‚ÃƒÂ‚Ã‚Â¢ÃƒÂƒÃ‚Â‚ÃƒÂ‚Ã‚Â¢ÃƒÂƒÃ‚Â‚ÃƒÂ‚Ã‚Â¬" 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.
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