Blackberry to acquire Good Technology in $425M cash deal

BlackBerry has decided to acquire Silicon Valley-based Good Technology Corp in a cash deal amounting to $425 million. The acquisition is expected to help BlackBerry manage corporate clients' smartphone running on different operating systems.

The Canadian smartphone maker BlackBerry is optimistic that the deal would help it get new customers for the service business. BlackBerry has shifted its focus to device management software for enterprise customers.

Apple Inc's iPhone devices run on Good Technology Corp system. It's estimated that over 50 percent of devices run on Good Technology Corp system are Apple's phones.

The expected revenues would realize from the acquisition will be $160million in the first year, forecasts BlackBerry. The shares on Toronto Stock Exchange were up over one percent following the acquisition news.

With acquiring Good Technology, BlackBerry's days as a hardware-first company is here again, observe market watchers. The Good Technology is known for facilitating smartphones work in better way. The deal is expected to help BlackBerry and Good Technology to enhance their performance and overcome their weak points.

Good Technology was planning to go public, but the IPO couldn't materialize for the company. Good Technology has already raised $291million from investors. Considering this, some analysts also view that it would be a down exit for Good Technology. Good Technology's revenues were $211.9million in 2014 up from $160.4million in 2013.

The company's revenues were growing at 30 percent annually and it was able to reduce the net loss also. The net loss was reduced to $93.4million in 2014 from $117.5million 2013.

The deal is also raising many eyebrows as some analysts feel that Good Technology was sold for head scratching price. Selling at a price just over twice the revenues, which grow 30 percent annually may not be a fair deal for the company, observe some analysts.

The previous buyout deal for BlackBerry was $200million. The latest $425million acquisition deal is the major one for BlackBerry so far. Telecom industry analysts feel that BlackBerry's future lies more in supporting devices than manufacturing them.

The acquisition will also help BlackBerry's launch of Android smartphone. Big-screened slider launches for BlackBerry gives a different situation in which selling both a business-friendly Android phone and serves needed to make it soar.

BlackBerry Chief Executive John Chen assures the positive cash flow throughout. While emphasizing on more hard work in the days to come, Chen sees a lot of opportunities to enhance value for shareholders.
After the acquisition, BlackBerry maintains its own products along with those of Good Technology as well, for which it'll develop a unified product over two years.

JPMorgan Securities and Bank of America Merril Lynch were the advisors on the deal for Good Technology.

Good Technology offers complete secure mobility solutions for iPhone, Android, and Windows phones. When users switch over from BlackBerry to iOS, Android or Windows, then security IT requirements are important for customers.

This is where Good Technology comes in to picture as it has apps that users expect the security IT demands. This enables users to move from BlackBerry.6 or 7 versions to new mobile platforms.