Report: Lenovo may make bid on BlackBerry

Third bid for troubled company

Britain BlackBerry

The Wall Street Journal is reporting that Chinese computer-maker Lenovo Group is considering a bid on smartphone-maker BlackBerry. The report says Lenovo has “has signed a non-disclosure agreement to look at the smartphone maker’s books.”

The Journal quoted unnamed people familiar with the development.

This would be the third potential bidder for the troubled Canadian company which has seen its fortunes collapse in the past three years in the wake of the success of iPhones and other mobile devices.

Earlier in September, it was reported that Prem Watsa’s Fairfax Financial would make a $4.7 billion bid on the company. Currently Fairfax owns 10% of BlackBerry. The Fairfax consortium is expected to complete its due diligence by Nov. 4. Until then, BlackBerry is allowed to actively solicit and evaluate rival offers. Last week, BlackBerry founder Mike Lazaridis and Doug Fregin announced that they were interested in making a bid as well with the aim of “stabilizing and ultimately reinventing” BlackBerry.

Based in Beijing, Lenovo is the second-largest personal computer vendor in the world. It also sells tablets, smartphones and servers. In 2012, it had revenue of US$212 billion.

While IDC analyst Kevin Restivo stressed that there has been no real bid yet from Lenovo, only a rumoured letter of intent, he said BackBerry’s business was certainly inviting from Lenovo’s point of view. He said Lenovo was just beginning to advance into the smartphone business and the acquisition of BlackBerry would automatically bring it a large Western market of business phone users.

Restivo said getting the federal government to approve a deal would be a high hurdle for any foreign company and perhaps in particular a Chinese company.

The bid for a Canadian technology company by a Chinese company is sure to be a cause for concern and perhaps embarrassment for the government of Stephen Harper. Last year a bid for miner Potash Corp. by Australia’s BHP was turned down by the government because, it was ruled, the company held a strategic resource. A similar bid by Chinese national oil company CNOOC in 2012 for Canadian oilsands company Nexen was successful but was controversial. The process for foreign takeovers of Canadian companies, and the entry of foreign companies in specific markets has been criticized as being unclear for all participants.

Yesterday in the Throne Speech, the Conservative government said it would commit to “continue to ensure that our natural resource sectors remain open to foreign investment when it is market-oriented and in the long-term interests of Canadians.”

BlackBerry has struggled this year as sales of its latest smartphones, the BlackBerry 10 models, failed to catch on. It recently reported a quarterly loss of US$965 million. The company is in the process of restructuring, in hopes of cutting its costs by 50%, and plans to eventually reduce its global workforce by 40%.

Shares of BlackBerry closed up 7 cents this afternoon on NASDAQ.

With files from The Canadian Press