BlackBerry Ltd. is stepping up its lobbying efforts in Ottawa in a bid to smooth regulatory hurdles if the company can find a foreign buyer for its struggling business.
The Waterloo, Ont.-based smartphone maker recently added the Investment Canada Act to its discussion topics with government officials under the lobbying registry, which previously included a number of topics ranging from intellectual property legislation to tax policy, law enforcement and other subjects.
BlackBerry executives have met with government officials to discuss the implications of any deal that may involve a foreign company, even though no such deal is imminent, according to sources familiar with the situation. The meetings, government sources say, are to familiarize Ottawa with BlackBerry’s strategic review process and help the company understand the rules a takeover bid would face.
Government sources say meetings with BlackBerry are to ensure there are no surprises in Ottawa as the firm anticipates bids or offers for its business. The government has not been informed of any formal offers, and would be unlikely to give assurances about any deal before the fact.
BlackBerry last month announced the creation of a board committee charged with considering the company’s “strategic options,” including a sale of the entire company, which has been clobbered by rivals in the smartphone industry. A hoped-for comeback, powered by a new line of phones, hasn’t materialized.
But so far, no clear suitor has emerged. Microsoft Corp., once rumoured to be an interested party, instead opted to buy Nokia’s phone business. Some possible foreign buyers, including China’s Lenovo Group Ltd., may not have the resources to make a deal work – and the prospect of a Chinese firm owning part or all of a mobile network that runs many sensitive government phones may also cause concern in Ottawa.
The most substantive meetings between BlackBerry officials and the government have been with the Investment Canada division of Industry Canada, the unit that would review any foreign takeover.
Any deal involving BlackBerry would easily pass the $344-million threshold that triggers a government review. A bid that is not majority-led by a Canadian firm, such as Fairfax Financial Holdings Ltd., the Toronto-based private equity firm that is already BlackBerry’s biggest shareholder, would also trigger a foreign investment review. So far, efforts to have Canadian pension funds combine forces on a BlackBerry buyout have found little traction, according to sources.
Still, BlackBerry’s efforts in Ottawa appeared aimed at making sure there would be no surprises should a buyer surface.
“Of course they would want to do this,” said BGC Financial analyst Colin Gillis. “It doesn’t mean they have a Chinese buyer or an American buyer – it’s due diligence.”
A BlackBerry spokeswoman declined to comment on the company’s meetings in Ottawa.
There has been little in the way of good news for the company as it tries to find a buyer. This week, it undertook a small round of layoffs related to its U.S. sales team, but a spokeswoman did not stipulate how many positions were affected. U.S. BlackBerry sales have plummeted in recent years, and the company now controls just 1 to 3 per cent of the market there, according to multiple research reports.
The company reports its next quarterly results on Sept. 27.
Though BlackBerry’s smartphone business is struggling, much of the the company’s value lies with its broad portfolio of technology patents.
“If I were Apple … and I just wanted to get at their patents, I would consider making a run at them,” Mr. Gillis said.