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Samsung Makes Takeover Approach to BlackBerry

BlackBerry denies source's report of buyout discussions.

Reuters / Dado Ruvic

Smartphone giant Samsung has recently approached BlackBerry to buy the company for as much as $7.5 billion, looking to gain access to its patent portfolio, according to a person familiar with the matter and documents seen by Reuters. Responding to the report, BlackBerry said no such talks had taken place.

According to the source, South Korea’s Samsung proposed an initial price range of $13.35 to $15.49 per share, which represents a premium of 38 percent to 60 percent over BlackBerry’s current trading price.

The offer price would imply an enterprise value of $6 billion to $7.5 billion for BlackBerry, assuming conversion of $1.25 billion of convertible debt, according to the documents. A deal would give Samsung access to Blackberry’s patents.

Executives from the two companies, which are working with advisers, met last week to discuss a potential transaction, the source said, asking not to be identified because the conversations are private.

In a statement, BlackBerry said: “BlackBerry Limited is aware of certain press reports published today with respect to a possible offer by Samsung to purchase BlackBerry. BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry. BlackBerry’s policy is not to comment on rumors or speculation, and accordingly it does not intend to comment further.”

News of the meeting, which sent Blackberry shares up nearly 30 percent, comes as the smartphone maker looks for renewed growth and for a way to regain market share it has lost to Apple and Google’s Android.

Any tie up with Samsung would have to have the blessing of Prem Watsa, whose Fairfax Financial Holdings is a major BlackBerry shareholder. Fairfax helped bankroll a debt recapitalization that led to John Chen’s arrival in November 2013 as CEO.

BlackBerry launched its long-awaited Classic model on Wednesday, hoping to help win back market share and woo customers still using older devices with a keyboard. The phone resembles its once popular Bold and Curve handsets.

In the third quarter, revenue at BlackBerry fell to $793 million from $1.19 billion a year earlier, falling short of analysts’ expectations of $931.5 million.

BlackBerry announced a high-profile security partnership with Samsung in November. The partnership will wed BlackBerry’s security platform with Samsung’s own security software for its Galaxy devices.

(Reporting by Jennifer Ablan and Liana Baker in New York, Editing by Soyoung Kim)

This article originally appeared on Recode.net.