BlackBerry is looking to further boost its enterprise expertise with an all-cash acquisition of US firm Good Technology for $425 million.
Mobile security provider Good will complement BlackBerry’s existing capabilities, at least that’s the hope of the struggling Canadian vendor for whom this is a significant outlay.
“This represents a step-up level in our M&A activity,” said John Chen (pictured), BlackBerry’s executive chairman and CEO, on a call following the deal’s announcement. “Our M&A focus will continue but expect our focus to be on small tech categories [going forward].”
BlackBerry wants the deal to deliver greater ability to offer cross-platform enterprise mobility management solutions in a market with varying deployment models, such as bring-your-own-device; corporate owned, personally enabled; as well as environments with multiple user interfaces and operating systems, the announcement said.
Good talks up its cross-platform capability, although nearly two thirds (64 percent) of activations comes from iOS devices, followed by “a broad” Android and Windows customer base. The idea is to combine Good’s customer spread with BlackBerry’s strength via its own BlackBerry 10 platform and its Android capability, including Samsung Knox-enabled devices.
BlackBerry’s Chen admitted it has always been strong in the mobile device management space but weak on “the container for other operating systems” (although it works with Google on Android). Meanwhile Good is strong on iOS. “So it’s complementary,” said Chen.
BlackBerry anticipates the acquisition to be accretive to earnings and cash flow within the first year after closing. It also expects to realise approximately $160 million in GAAP revenue from Good in the first year, including the impact of an expected write-down of certain deferred revenue of Good.
“By acquiring Good, BlackBerry will better solve one of the biggest struggles for CIOs today, especially those in regulated industries: securely managing devices across any platform. By providing even stronger cross-platform capabilities our customers will not have to compromise on their choice of operating systems, deployment models or any level of privacy and security,” said Chen in the deal’s announcement.
“Like BlackBerry, Good has a very strong presence in enterprises and governments around the world and, with this transaction, BlackBerry will enhance its sales and distribution capabilities and further grow its enterprise software revenue stream.”
On the call, Chen highlighted how BlackBerry will benefit from Good’s leadership position in the defence sector, an area the Canadian vendor “doesn’t do that well in.”
Chen said that the long-term aim is for both company’s products to be integrated into “one unified platform.” No specific dates were set for that goal. “It may take a year or two,” he commented. “We will be merging the organisations into one but we won’t force customers to do any immediate integration.”
In a research note received by Mobile World Live, analyst Jack Gold was upbeat on the deal: “I expect this acquisition was a marriage of convenience for Good who needed some financial bolstering and a way to go public/exit for its investors. For Blackberry, it acquires a customer base that it can up sell and it consolidates itself in the EMM market to compete with the few standing large players (e.g., IBM, Citrix, VMware). Assuming that the two products can be integrated successfully and only the complementary ‘best of the two’ remain, this is a good acquisition for Blackberry and a good exit strategy for Good.”
BlackBerry expects the transaction to be completed toward the end of the company’s 2016 fiscal third quarter (which closes end-November 2015) and is subject to closing conditions, including regulatory approvals.