Chinese group Lenovo is preparing a possible full takeover bid for the Canadian maker of BlackBerry smartphones, according to sources close to the situation.
Manufacturer of PCs and smartphones, Lenovo has entered into a confidentiality agreement with BlackBerry that allows the company to inspect in detail the financial situation of the Canadian company, said one source. Contacted by World Street Journal, a Lenovo representative declined to comment.
A representative of BlackBerry stated that the company is not going to make any announcement regarding the evaluation of strategic alternatives prior to approval of any transaction.
BlackBerry has signed in September a preliminary agreement worth $4.7 billion with a consortium of investors led by Canadian insurance group Fairfax Financial Holdings, one of the largest Blackberry shareholders.
Lenovo is one of the most important investors interested to take over the Canadian company, according to the same sources. Cerberus Capital Management fund and Blackberry co-founder Mike Lazaridis are also considering a bid for the struggling Canadian smartphone manufacturer.
BlackBerry began in August to seek interested investors to take over the company, after several years of decline after the rise of Apple and Samsung in the smartphone market.
The takeover by Lenovo is considered one of the most visible Chinese investment in a business in the Western world and will surely attract the attention of authorities in Canada and the United States.
Under the Canadian law, any offer of over $344 million from overseas for a Canadian company has to be approved first by the government, which will assess whether the agreement brings “net economic benefit” or would represent a risk.
Last week, the government of Canada dismissed for reasons of national security, a takeover bid of the Egyptian billionaire Naguib Sawiris for a division of Manitoba Telecom.
Manitoba businesses are less important than BlackBerry’s in terms of the Canadian government for strategic reasons. BlackBerry smartphones are widely used by government agents and civil servants in Canada and the U.S., including the Department of Defense in Washington.
In 2010, the Canadian government blocked a mega transaction worth $39 billion – Australian giant BHP Billiton tried to buy the fertilizer manufacturer Potash Corp. Government invoked when the strategic economic importance of the Canadian company.
Lenovo took over in 2004 IBM’s division that manufactures PCs for $1.25 billion. Currently Lenovo is fighting Hewlett- Packard for a leadership position in personal computers.
This summer, the Chinese company Shuanghui took over the U.S. pork producer Smithfield Foods for $4.7 billion.
Lenovo produces personal computers, smartphones, tablets, servers and computer peripherals such as keyboards and mice.
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