A wholly owned subsidiary of RIM has formally commenced its take-over bid of Certicom Corp.
According to a recent press release, Research In Motion's subsidiary has offered CAD $1. 50 in cash per share ($66 million in cash total) , hoping to buy all of the encryption vendor's outstanding common shares. Originally, Certicom had 35 calendar days to accept the private offer before RIM moved forward with its public, hostile take-over. Now with the offer officially in motion (no pun intended) , the subsidiary will keep the offer on the table until 5: 00 p. m. (Toronto time) on January 15, 2009. RIM's subsidiary has prepared a take-over bid circular and related documents that are now available here; these documents will also be mailed to shareholders as well.
This hostile takeover bid is a definite sign that RIM wants more control over the security components of its Blackberry phones, however talks about a "potential transaction" began as far back as February2007. "At various points since beginning discussions, RIM has conducted certain due diligence on the business and we continue to believe Certicom is a natural fit for RIM. Our collective expertise and business resources would increase the adoption of Certicom's technology, " said Jim Balsillie, Co-CEO of RIM.
Balsillie goes on to state that he believe the proposed offer is indeed fair, that it reflects the full value of Certicom and takes into account the growth prospects and potential synergies made possible by the transaction. "As we are unable to engage Certicom management in a meaningful dialogue to advance the terms of a potential transaction, we believe it is in the best interests of our respective shareholders, employees, and customers to make this attractive offer directly to Certicom shareholders now. "
The tasty pot of honey RIM has its eyes focused on its Certicom's elliptic curve cryptography (ECC) technology, currently implemented in all Blackberry platforms; IBM, Microsoft, and Motorola are but a few other clients using Certicom's technology. On December 3, the company formed a Special Committee of its Board to "evaluate and consider the adequacy of RIM's proposal, "and even called on other clients to place bids. Apparently, another party actually attempted to engage RIM "in a fair (bidding) process, " before the current hostile bid, but was given the middle finger by RIM, wanting to engage in exclusive discussions only.
But if RIM succeeds in acquiring the proposed shares, RIM would make a substantial profit from competitors that also license Certicom's security technology, and will even provide RIM market and technological advantages. Had Certicom not taken one lump sum from RIM back when it sold its intellectual property rights to the company (rather than accepting payment per device) , the company would not be left wide open for hostile takeover years later.
"Looking back, hindsight is 20-20, " said Certicom's chief executive Karna Gupta.