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Lenovo Chairman and Chief Executive Officer Yang Yuanqing speaks during a news conference announcing the company's annual results in Hong Kong in this file photo from May 21, 2014. BlackBerry shares rose more than 3 percent October 20, 2014 after a news website said Chinese computer maker Lenovo Group might offer to buy the Canadian technology company.

BOBBY YIP/REUTERS

A year after Ottawa quietly signalled opposition to a Lenovo Group Ltd. takeover of BlackBerry Ltd., rumours are surfacing that the Chinese company is poised to make another play for the Waterloo, Ont.-based smartphone maker.

Although BlackBerry's long-suffering shareholders embraced the speculation, driving the stock price up nearly nine per cent on Monday, Lenovo's odds of succeeding with a takeover are even smaller today than they were last year. The chances of a winning bid are so remote, according to one person close to BlackBerry, that the company has not entered merger discussions with Lenovo.

A spokesperson for BlackBerry declined to comment. Lenovo could not be reached for comment.

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BlackBerry was fighting for its life when it entered friendly merger discussions with Lenovo last fall. The 2013 launch of the BB10 phone series was so disasterous that BlackBerry was in danger of running short of cash. Despite the urgency, the federal government, then on the verge of rejecting an Egyptian takeover of Canadian carrier MTS Allstream, opposed the marriage.

According to people familiar with the talks, senior federal officials signalled through back channels that Ottawa would oppose a foreign purchase of a company whose secure network and phone systems relayed a significant share of government and corporate data messages.

Today, BlackBerry is a recovering company with a new chief executive officer, John Chen, a new line of phones and a patient major shareholder, Fairfax Financial Holdings Ltd., which owns a 9-per-cent stake in the handset maker.

Fairfax's founder and lead BlackBerry director, Prem Watsa, is a long-term value investor who is supporting a multiyear turnaround. Having paid an average cost of about $17 a share for his BlackBerry stake, it is unlikely Mr. Watsa would be motivated to sell unless a suitor was willing to pay a meaningful premium for a stock that closed at $11.63 on the Toronto Stock Exchange Monday.

Lenovo's other big hurdle are some of BlackBerry's biggest customers: Washington and Ottawa. Blackberry's message encryption service and secure network are prized by security-conscious departments and agencies on both sides of the border. At the U.S. defence department, for example, BlackBerry devices account for about half a million, or 80 per cent, of the smartphones issued to staff. U.S. politicians have been vocal opponents in the past of major Chinese takeovers and any bid by Lenovo would likely be subjected to intense scrutiny and opposition.

BlackBerry has been so reluctant to alienate core government clients that it shelved a plan in 2011 to form a licensing venture with Chinese backers that included the giant state-owned investment fund China Investment Corp. Under the plan, BlackBerry would have licensed its operating system to Chinese handset makers who were struggling to keep up with global competitors, such as Nokia, that then dominated the country's market. The strategy was shelved over concerns that it would alienate government customers and weaken BlackBerry's global sales.

Lenovo is a recent contender in the brutally competitive smartphone market and it has grown quickly at the expense of once dominant players such as BlackBerry and Nokia. According to the research firm Gartner Group, Lenovo accounted for nearly 5 per cent of global smartphone sales, nearly twice BlackBerry's 2.7-per-cent share.

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