RIM's BlackBerry Assets May Fetch $25 Billion in Takeover

Strategic Insights -

Research In Motion Ltd. (RIM) may attract interest from Samsung Electronics Co. and Microsoft Corp. after Google Inc.'s $12.5 billion deal for Motorola Mobility Holdings Inc. A sale could nearly double BlackBerry's value, according to analysts at Morgan Keegan & Co. RIM's decline in market value, from a peak of $83 billion in 2008 to around $13.5 billion in 2011, has left the company vulnerable to takeover.

Key Takeaways:

  • Google's $12.5 billion deal for Motorola Mobility Holdings Inc. may bolster RIM's value to potential bidders, with a buyer able to get a smartphone maker still dominant among corporate clients and running its own operating system.
  • A sale of RIM's assets could fetch up to $25 billion, nearly doubling its current value of $13.5 billion, according to an estimate from Morgan Keegan & Co.
  • Google's Android platform has become the leading mobile-phone operating system, rising to 43 per cent market share in the second quarter, while Apple's iOS climbed to 18 per cent and RIM's BlackBerry OS fell to 12 per cent.
  • Samsung Electronics Co. might consider acquiring RIM because Google's acquisition of Motorola may increase its concern Google will become a competitor in the handset business.
  • Microsoft Corp. may also consider acquiring RIM to build its smartphone share and gain a device to complement its Windows Phone 7 platform.
  • RIM's patents alone could be worth as much as $5 billion, based on what Apple and Google each paid for patents owned by Nortel and Motorola, respectively.
  • Analysts at Morgan Keegan, William Blair and Detwiler Fenton & Co. say that Samsung would be the most likely company to buy RIM.
  • Microsoft could buy RIM to build its smartphone market share and gain a device to complement its Windows Phone 7 platform, according to Paul Taylor, chief investment officer at BMO Harris Private Banking.
  • Buyers may not be willing to pay a significant premium for RIM, with Matt McCormick, a money manager at Bahl & Gaynor Inc., saying "the real variable is what are you getting and what are you paying for it."

Statistics:

  • RIM's market value has plummeted almost $70 billion since peaking in June 2008 through Thursday.
  • Apple's market value doubled to become the world's second-largest company with a market capitalization of $339 billion as of Thursday.
  • Google agreed to pay a dot-com era premium for Motorola Mobility Holdings Inc.
  • The Google-Motorola deal may approach the $30.2 billion in transactions announced in 1999, the highest level since 1999.
  • Google's $12.5 billion deal for Motorola Mobility Holdings Inc. is the highest premium for a wireless-equipment takeover greater than $500 million since 1999.

Sources:

  • Bloomberg News
  • Morgan Keegan & Co.
  • William Blair & Co.
  • Detwiler Fenton & Co.
  • Gartner Inc.
  • Sanford C. Bernstein & Co.
  • BMO Harris Private Banking
  • Bahl & Gaynor Inc.
  • Gleacher & Co.
  • 2011 Waterloo Region Record.