Why BlackBerry Ltd Is a Prime Takeover Target


BlackBerry Ltd (NYSE:BB) has hundreds of enterprise customers, IT security expertise, and valuable patents that make the company a prime takeover target for many tech giants. The potential of a takeover is one factor that makes BlackBerry stock attractive.

Why BlackBerry Stock Is a Prime Takeover Target

BlackBerry Is a Prime Takeover Target

Since Samsung offered to pay up to $15 per share for BlackBerry stock in 2015, and BB’s software business has made a great deal of progress since then, I am confident that BB would not sell itself for less than $20 per share.

BlackBerry’s enterprise mobility management unit alone had over 500 customers as of June 2016, and the company said in June 2017 that it had 3,000 orders from enterprise customers in its fiscal first quarter. Moreover, many huge, impressive enterprises have been buying BlackBerry’s products and services.

FedEx Corporation (NYSE:FDX), multiple central banks, Delphi Automotive PLC (NYSE:DLPH), Ford Motor Company (NYSE:F), Tata Elxsi, Hitachi Ltd (OTCMKTS:HTHIY), Fujisoft, UBS Group AG (USA) (NYSE:UBS) and the Development Bank of Singapore are all partners/customers of BlackBerry.

And, since the tech company has more than 23 transactions worth over $100,000 with the federal government in its second quarter, it clearly has a strong foothold in that sector.

Given its large enterprise customer base, BB would provide any acquirer with tremendous cross-selling opportunities. That is, any company that bought BlackBerry would have an inside track to selling its products to BlackBerry’s existing customers.

Consequently, companies like Apple Inc. (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG) which are trying to expand their relatively nascent enterprise businesses could look to buy BlackBerry.

Companies such as International Business Machines Corp. (NYSE:IBM) and Cisco Systems, Inc. (NASDAQ:CSCO) which specialize in selling products to enterprises could also bid for BB.

BlackBerry’s IT security expertise also should make it enticing to a number of major technology players. As I previously reported in September:

“One of the country’s most renowned tech research firms, Gartner Inc (NYSE:IT), for the second year in a row has given BlackBerry its ‘highest score for all six use cases in its Critical Capabilities for High-Security Mobility Management,’ American Security Today reported.”

As a result, major IT security companies such as Check Point Software Technologies Ltd. (NASDAQ:CHKP) and Palo Alto Networks Inc (NYSE:PANW) could very well look to buy the Canadian tech upstart in order to enter the enterprise mobility management and/or the driverless car sector.

Speaking of driverless cars, BlackBerry could easily become a takeover target for companies looking to enter or further penetrate that sector which is set to boom shortly. By buying BB, such companies would be able to incorporate a highly trusted IT security system into their autonomous vehicle solutions.

Potential acquirers in that category include (but are certainly not limited to) Intel Corporation (NASDAQ:INTC), Nvidia Corporation (NASDAQ:NVDA), Delphi, Google, Tesla Inc (NASDAQ:TSLA), Tata Motors Limited (ADR) (NYSE:TTM) and many other automakers.

Finally, BlackBerry’s valuable patents could entice other acquirers looking for a steady source of cash and a solid passive investment. BlackBerry has already made patent licensing deals with Timex and Android phone maker Blu.

It has pending lawsuits against Nokia Oyj (NYSE:NOK) and Avaya, and it holds 130 patents on encryption technology that “the US and other governments say is the best way to protect sensitive data, and should replace the methods relied on to secure the Internet today,” Tom Simonite, a columnist for MIT’s Technology Review wrote in August 2013.

(The many deals that BlackBerry has obtained recently from the federal government indicate that its IT security technologies are still quite potent in 2017.)

A company like Tesla, which has a high stock price but needs all the cash it can get, may elect to buy BlackBerry in a stock and cash deal and sell everything but QNX and its more valuable patents.

Bottom Line on BlackBerry Stock

There is a very strong possibility that BB will be acquired for a price significantly above the current level of BB stock.  That possibility, along with the company’s proven strong technology and exposure to high-growth sectors, makes BlackBerry stock very attractive at current levels.

As of this writing, Larry Ramer owned shares of BlackBerry stock.  

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2017/11/why-blackberry-is-a-prime-takeover-target/.

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