Lenovo's bid for BlackBerry reportedly blocked by Canadian government

By Adam Zeis on 5 Nov 2013 03:03 pm EST
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While the rumors were flying for the last few weeks about various companies that may step up to enter a bid for BlackBerry, Lenovo was one of the names to enter the mix. We explored what would happen if Lenovo were to go through with a purchase and the Chinese company had reportedly gone so far as to sign an NDA with BlackBerry in order to view their books.

Now the Globe and Mail has reported that any potential deal between BlackBerry and Lenovo would have been shot down by the Canadian government citing national security concerns, which isn't that surprising given the role of BlackBerry in the government and enterprise space. An anonymous Canadian government official stated "We have been pretty consistent that the message is Canada is open to foreign investment and investment from China in particular but not at the cost of compromising national security."

According to the report Lenovo was extremely interested in BlackBerry, which yesterday called an end to their strategic review and received a $1 billion investment from Fairfax Financial and other institutional investors. 

 

Reader comments

Lenovo's bid for BlackBerry reportedly blocked by Canadian government

165 Comments

It took the government to step in for them to realize that such a deal is a security risk? They're a security company handling delicate data, they never saw that themselves? Not sure what the entertainment of such sale talks between them and companies like Facebook and lenovo were about if they're supposed to be a serious security company. The stupid things people consider doing e when they panic.

A camel is a horse designed by a committee.

I don't think the board of directors is in a position to say no to offers: BlackBerry can sell to whomever they want. The Canadian Government won't let Lenovo BUY BlackBerry... there's a difference. Subtle, but a difference nonetheless.

If the Government of Canada ever approved the sale the fate of BlackBerry within any government would have been signed, sealed and delivered.

Posted via CB10 from the BlackBerry Z10

When US media keeps bashing BlackBerry, all Canadian shut up in silence and just watch. Many Canadian media follows US daddy to bad mouth BlackBerry too.

Where is Canadian National Pride when facing US daddy? Shame!

It is US company and media killed BlackBerry, plus Canadian. Government rather see BlackBerry die as long as their US daddy is happy.

Posted via CB10 with Q10.

What utter nonsense! BlackBerry is responsible for the position that they are in today. Yes, the media are jerks, but that's what predators do. They attack the weak and dying. BlackBerry should have continued to innovate and not think that they were untouchable. They became self satisfied. They stopped being Research in Motion (I am talking about what the name stood for) and they lost momentum.

Posted via CB10 ~ visit my portrait channel C0011B779

They most likely knew that the government would block it regardless do it doesn't surprise me.

I be really shocked if they did lol. The DoD would have definitely protested lol!!!

That's called strategy my boy.. they allow lenovo to view the books fully knowing that the government/others would step in/up to prevent such an obvious calamity/potential security nightmare.

BlackBerry:- down but not out!

Posted via CB10

Well if our beloved government cares so much about BlackBerry (only for "national security" purposes) why doesn't it step in and help restructure the company to turn it back into a profitable one? I'm pretty sure support from the Canadian gov't will help move BB back in the right direction. Besides, is it simply better to let the company become broken down into pieces then sold than having another foreign company buy it as a whole?

Why not? They (and the US) did it with GM/Chrysler with a bailout citing National security and became a lender of last resort.

Posted via CB10

Um, no.
The fallout and repercussions from any of the Big 3 going under would have been quite substantial and would have had a pretty significant impact on the American economy (or so they say).
Not so much with BB

Yes it is. It's no different to subsidizing. The Korean government invested heavily in Samsung's R&D before they were able to get on their own two feet and produce very good products. The problem with the Canadian government is they are invested in natural resources only. That is not sustainable in the long run.

Posted via CB10

Canasux probably don't want so many info landing on a chinese company. They just want BB die and take all confidential infos with them. Canadians may have pride but not canada, canada is pussy.

First go and learn some English grammar and then you can come back and debate with the adults. OK, little boy?

Posted via CB10

I think Canadian government gives BlackBerry tax refunds based on research investment? Same for all companies I guess. There is only so much they can do in a free enterprise environment.

Posted via CB10

No surprise. BlackBerry can stand on its own. It just won't be a huge company like Apple. Just needs to control expenses, turn a profit, which will in turn spur confidence etc.

Trolls should be forced to use BB10!

Why is the Canadian Govt shutting out Lenovo ? , Why are shareholders not getting all the details of the Lenovo offer? Maybe it was a cash injection with a partnership opportunity from Lenovo !!!. Now we have this $1B convertible Bond which is not fully subscribed and God knows what !
I thought BlackBerry was communicating the importance of installing confidence in the market ! To go private and get out of the day to day financial reporting and focus on Enterprise and Prosumer growth. Now we have even more confusion and yes another several quarters of bad news conference calls to come !! I know professionals who are using Bold 9900's and Torch model phones who are not even thinking of upgrading to the BB10 because of all this bad press in the media and lack of confidence in BlackBerry !!
Spoke to a BlackBerry Tech support on the weekend who was very helpful and I carefully asked about the job cuts in Nova Scotia and it was not pretty !!!
Our Canadian Government , BlackBerry Board and BlackBerry are responsible for this share price decline , poor confidence from the market and most of all the layoffs !!

Hope the new CEO John Chen is ready for the tough questions to come ??

Incredible !!

The Canadian gov't can't really go giving free access to BlackBerry security IP. Not sure where exactly you think the scandal is in any of this.

Let me see the lenovo deal ?? what do we do watch this company go to zero in the meantime and watch all the layoffs

If the government is treating BlackBerry like a strategic resource like all other Global telecoms/Tech companies. Then the Govt. of Canada should backstop Blackberry with a $5B cash injection like the auto sector bailout and lets kick ass and win back some mobile enterprise & consumer/Prosumer customers back to Blackberry and employ educated Canadians. Because so far we have nothing but a jobless company fighting for its life !! Alarm Alarm !!

Auto sector is american...BB is Canadian...no bailouts for Canadians...
And who do you think is bending over backwards to "kill'' BlackBerry??

Chrysler??? Those bastards!

JK, but who do you think? And what proof do you have? I'd love to hear your version of the conspiracy.

I would have zero problem with a bailout of BlackBerry if it were required. But BB just got a billion dollars invested in it and had a much needed change of leadership. Seems like they have it in hand to me for the time being.

"Why is the Canadian Govt shutting out Lenovo ?"
1. Investment Canada Act states that any substantial (~ few hundred million) foreign investment will be reviewed and rejected if it doesn't provide a 'net benefit' to Canada
2. Allegations of spying from Chinese companies makes our federal government uneasy
3. This had nothing to do with wanting BB to stay alive or die

1- greater then $300M is the number, What is Net Benefit rules ? Please tell me you will be the first ? , Potash gets a NO , Progress Energy gets a Yes Hmmm sounds clear to me ....???

2- Stop with 007 excuse, lets see the Lenovo deal first before we jump to conclusions. Maybe it was a Partnership with BlackBerry and BBRY would be controlling all the security etc....lets see the deal

3- this had nothing to do BB staying alive geez $500M ++ tax credits , scared job losses , stock is probably heading to cash levels !!!

1. Definition of 'net benefit' truly is murky, but seems to be taken case by case. I doubt that this particular deal would have been net positive, whatever that means
2. While nothing is proven, can you really call it a '007 excuse' after the recent revelations of spying around the world? I'm the furthest thing from a conspiracy theorist, but to not even be skeptical is naive
3. You can't have a market where a government picks and chooses who should stay in business and who shouldn't (auto bailout is a diff story). I love BB products, but you have to let the market decide who stays and who goes, not the government
4. Agree that seeing any potential Lenovo deal would have been a positive. I just disagree with the notion that this was done to spite any and all potential BB financing

Exactly not surprised in the least bit. When Lenovo was rumored I knew for sure BlackBerry would be prevented from being sold to the Chinese on security grounds. Too many governments rely on them.

CB10 - Z10 -10.2.0.1791

Right, let's go stir up some extra diplomatic bullshit for other branches of the government to fix.
Trust is not blind - a government should not blindly trust another foreign government anyways.

Good save canada first time I actually agreed with the government...now they shouldve stepped in and bail out BlackBerry like America did for gm

Posted by z10 boss

I don't think BlackBerry needs a bailout yet, they had no debt, billions in cash and real estate and they trimmed half the work force. At this point the best thing the government could do is buy new BlackBerry 10's for its employees.

Posted via CB10

If BlackBerry is so important to national security why is it so hard for the government to make them #1 priority in the mobile communications area?? Something isn't right there

Sincere question: How exactly can the Canadian Government do this apart from purchasing BlackBerry? This option would only result in all other governments to drop BlackBerry use as it threatens their national security.

Well, it's Chen, your cute rhyme notwithstanding.

And "may" and "will" are two different things. And it doesn't seem that he said that:

"we're really not in phones but we're in phones for software, for services."

I take that to mean, there's no point in just selling phones, as phones. Anyone and their dog can make a phone. If it's not selling through to more services, consumption, moneymakers for the company -- it's a losing proposition to just churn out hardware for the sake of hardware, especially if it seems overpriced.

For instance, iPad,iPhone,iPod are all consumption devices for iTunes. And the more you have invested in iTunes, be it apps or media, the more you'll want to replace your iPiece when it breaks.

And that's what it's all about (to the tune of The Hokey-Pokey.)

Agree with you there. The secret to Apple's success with the iPhone is not the phone itself, it's the services that you get access to once you have the phone. Also agree with the notion that when it breaks/get's old you just buy the "new" one because of what you have invested in the platform. BlackBerry needs to (somehow) do this as well.

Is blackberry getting spied on by the NSA I wonder? They probably have loads of dirt on Obama. Careful what you snap with that, POTUS!

From my smokin' Barbeque10

Lol, as much as I don't want Lenovo to taken the company over. if it's the only purchaser available, the government would rather the company go under than have a foreign purchaser.

Weird.

10

If the only potential buyer is perceived to present a national security risk, it would make sense to let the company go under, if that were the only other option.

It's not about the products, it's about the security IP. That's what they don't want in the hands of the Chinese, and with good reason.

Good move by our government. This spying crap is getting ridiculous and this should help minimize it!!!!

Posted via CB10

Totally Bogus
If Lenovo buying Blackberry is a security concern I guess we don't believe Blackberry when they say that can't read encrypted data on their networks. I guess the NSA and CSIS don't want people to know they actually can read all Blackberry data traffic.

The Canadian government should compensate shareholder for the difference between what Lenovo would have paid and what shares are at now.

If Lenevo would have bought blackberry what would have stopped them from altering devices to get whatever information they wanted

Posted via CB10

Yess! I'm glad it's not. As a Canadian, I want the company to stay Canadian. And I do believe blackberry will go back up. BB10 is awesome but it's just going to take time. There's still a lot of people that love their BB7 phone. And don't NEED to upgrade because BB7 is still great. I JUST got my q10. And my mom still loves her Torch. BlackBerry makes phones that you don't need to upgrade every year like the iPhones or Android. That's why people aren't buying the new phones I believe.

As a non canadian i can told you. lenovo was a chance, now there's a increased chance bb device business will no more exist within 2 years. The question is, what's happening with the os in this case.

No surprise the government did this. Now it should step up to the plate and publicly announce the purchase of a large order of BlackBerry devices and BES10 upgrades.

Posted via CB10

I was hoping someone would finally say that. The Canadian Government can do a lot more good by supporting the product in a meaningful way. Please place the order.

Posted via CB10

We're (SSC) working on it, trust me. BES 10 is one of the projects in the works. We're also in the process of consolidating e-mail for 40+ departments (~300,000 accounts), and only so many bodies.

...
Our home and native land.
True patriot love, in all thy sons command.
With glowing hearts, we see thee rise,
the true North Strong and Free.
From far and wide, O Canada,
We stand on guard for thee.
[u]God[/u] keep our land, Glorious and Free
O Canada, we stand on guard for thee.
O Canada, we stand on guard for thee.

That was from memory, a result of me having to listen to/sing it every weekday for the past thirteen years.

Q10 and Canadian all the way! Q10SQN100-3/10.2.0.1791

You should know it and be proud of it. Remembrance day is coming up, our soldiers volunteered to go to war and keep you free.

Just saying

I Love BlackBerry and Canada

Posted via CB10

The shame is we don't know if/what a bidding war would have looked like.
I have mixed feeling about the whole deal. I'm glad the company is trying to turn around, but I'm pissed as hell that that Fairfax pulled its bid and the CDN goverment meddled with the process. I have November calls which are now worthless which I bought because BBRY went from 18 to 8 (in a manner which should be looked at) this year.

Had Lenono put in a bid, we surely would have seen a bid from Mike L.
Then Prem would have needed to keep his word and make a bid.

This whole thing smells rotten.

What I don't get is the number of fans on the board who are not pissed. I guess most of the folks here do not own BBRY stock.

An appropriate move by the governing Conservatives.

Had Lenovo been successful my relationship with BlackBerry would have been severed.

Sent from my BlackBerry Z30

Shareholders should sue the government. It one thing when they say they'll see where things land and refuse to support Blackberry like they did GM. Its another when they block a bid that at least would have rallied the stock.

Posted via CB10

BlackBerry is our generations Avro Arrow and one day our kids will be watching a movie about how we made the best smartphones and the rest of the world copied it and now it's gone.

Posted via CB10

This is double standard. How about USA spying on every one? Because they are your friends or neighbour or allied? Business is business.

Posted via CB10

I remember the attempted take over of another security company a few years back..MDA, Canadian gvmnt blocked the deal but in return invested 100 million in some sort of defense contract , this time around however if they did block it...they didn't give anything back to help out BlackBerry

:(

The devil you know and all that?

It would have been interesting to see where lenovo would have taken BlackBerry - but with the new investment we at least get to see where the new BlackBerry management will take it..

Posted via CB10

Everything owned by Chinese is owned by their communist government. They pretty much control everything. Disney is even owned by China.

So if they go under, we can all be proud that BlackBerry failed as a Canadian company. Canada, f yeah.

Yeah doesn't make sense to me either - as others have said above, is BlackBerry a tech company or an arm of national security?

Having said that, I think there is something inherently Canadian about BlackBerry - I think if they changed to any form of foreign ownership it would feel like the end of the BlackBerry we know and love.

No Canadian do not love BB. See BlackBerry market share in Canada then you will know.

Canadian follows their US daddy on everything. Even Canadian media bad mouth BlackBerry constantly.

Posted via CB10 with Q10.

Well how about the Canadian government can pay for all my losses on black berry stock.
Assholes I'm hope there are class actions all over the place.
I mean do you think that there are little bugs on all lenovo computers that will record and copy everything we say and type

Posted via CB10

Do you think Lenovo would have paid a premium. I dont think so. Best bet down the road Lenovo partners with blackberry

All the butt hurt stocker owners sure have misguided anger. National security trumps your need to make profit. The judge will tell you the same thing when you take it to court.

Your anger should be placed on BlackBerry and incompetent management not on the government.

Posted via CB10

The stigma that the Chinese get is bs, this stinks. All this does is hold international businesses back.

Z10 all they way!

What's most pathetic is that fed.gov.ca is a BlackBerry shop and they have yet to announce that they are going with BES10 / bb10 devices

Posted via CB10

If the Canadian government can block the sales of a Canadian company. It should buy the shares off the shareholders should BlackBerry go bankrupt or privatize since it took away the investment opportunity from the investors.

Posted via CB10

First of all, it was always blindingly obvious that Lenovo would never pass the security requirements of the foreign investment legislation and it was irresponsible and ill-informed for commentators to bandy Lenovo's name about as a possible buyer without taking this into account.

Second, for all the people complaining that Canada owes them for blocking any potential Lenovo deal, what you, as an investor, need to do is understand the legal framework in which the company you have purchased shares of operates. A good number of very high profile foreign takeovers have been blocked by the federal government in the last number of years and in none of those cases did the federal government compensate shareholders for the loss of the deal.

Posted via CB10

The Canadian government did the correct thing. I know shareholders may not like it but we do need to protect out tech companies from foreign takeover. I would find it hard to believe Lenovo would be interested in keeping BlackBerry in Canada or keeping Canadians working. And yes, having BlackBerry in Chinese hands would be very bad. If I'm not mistaken most of the government uses BlackBerry handsets, which would be a security risk. Just my two cents.

Posted via CB10

I'm VERY happy a Chinese company didn't get their grubby fingers on BlackBerry.

Bravo to the Federal Government.

Posted via CB10

BlackBerry cannot survive on its own!

Lenovo is a perfect partner. If the Canadian government stops the transaction, then it must assist BlackBerry as needed. Otherwise the government is being unreasonable.

Posted via CB10

I think so BlackBerry doesn't need to get new phones to the market as of now...
They can concentrate on selling the current phones in inventory even if its at zero/ minimal profit to the company...
That would help in penetration and help in getting the numbers and would woo the app makers...

BlackBerry needs to get the bb10 phones in the market and more than the marketing, its the demonstration factor that makes thr buying decision...at least in my country.
People buy what they see in others' hands :) and they too want to have the same experience... sell those bb10 phones quick!!

Posted via the awesome keyboard on Z10STL100-1/10.2.0.1791 using CB10 App

Agree with you on the lack of confidence in BlackBerry, lots off ppl I know say "why bother thinking about getting a BlackBerry they won't be around in 2014 when my contract is up". They don't know about the product beside what I tell them. You can't sell your product if all ppl see is bad (spun out of proportion) news and not cool ads showing off how OS10 works, all BlackBerry10 Devices and BBM Channels and how it's a new Social Media.

Sent via Zed10

Does anyone know how many BlackBerry phoned the national government has? Is it now on bb10, or still legacy devices? What about Ontario government? Others?

Posted via CB10

Will the Canadian government backstop BBRY? If not, it seems harsh to block such a sale. What would happen to national security if BBRY stopped operating?

I don't think this is a done deal yet. Government is concerned about security, not hardware. Lenovo needs access to patents to sell in many markets outside of Asia. Seems like an asset deal for the hardware and patents is the only way to go to get government approval. This could explain what happened on Monday. Let's see how this plays out.

If you look up my earlier posts, I'd been predicting this for months. (I'll try to avoid wrentching my arm patting myself on the back, lol ;p) What will happen is that the gov't will let the market play out (while keeping it under Canadian control), and only step in if necessary, which it isn't at this point. Remember, our allies have a stake in this too, especially Five Eyes.