Can't ignore Lenovo's interest in RIM

BNN report: Lenovo looking at Research In Motion

Let’s get all of the guff out of the way off the top. BNN Television is trying to confirm that Lenovo is interested in acquiring Research In Motion (RIM:TSX). The company’s shares are definitely behaving as though RIM’s in play. Let’s assume there’s some truth to the rumour, although if a certain U.S. research analyst started it then I’d dismiss the whole thing out of hand (since his earlier promises of Microsoft and Cisco acquisitions never panned out, either).

Last evening, CNBC economist Steve Liesmen was singing the BB10’s praises on Twitter following a demo he had just received from a RIM executive:

– “look out iPhone”
– “typing screen is revolutionary”
– “the browser is stuningly fast”

“Not dead yet”, as the serf was heard to say in Monty Python and the Holy Grail. If the stock hadn’t railled 300% before yesterday, one might think about buying more based upon that review alone.

It stands to reason that a range of would-be acquirors would now be taking a new look at RIM if this is indicative of the reviews that the new Blackberry handset is receiving across the globe.

CNBC’s David Faber just opinied that the Canadian government has shut the door to new Chinese government-backed aquisitions in Canada post-Nexen, and that a Lenovo/RIM rumour needs to be taken with a grain of salt as a result. Oilsands, yes. But I have never heard a government official articulate such a policy beyond what the Prime Minister specifically said at the time of the Nexen approval.

There was some discussion of this perceived barrier on the Seeking Alpha website earlier this week following an interview Reuters did with Industry Minister Christian Paradis:

“We hope to see RIM remain a global leader and player, and make sure it can grow organically,” Paradis said by phone from Germany, where he is meeting with industrial leaders to promote Canada as a place to invest and to learn how they innovate.

Conservative Prime Minister Stephen Harper told Reuters last February that he wanted to see RIM grow “as a Canadian company.” He singled out hostile takeovers and bids for what he described as “critical technology” companies as ones that Ottawa might block.

No discussion of a Lenovo/RIM tie-up being Dead On Arrival. Just the usual hopes for future success at RIM and a reminder about the requirements of the Investment Canada Act, as would be expected of any responsible and thoughtful politician. In my mind, it would be pretty straightforward to make the deal of “net benefit” to Canada:

– guarantee Canadian employment levels at RIM for the first 5 years post-acquisition (something RIM can’t do following thousands of layoffs)
– contribute $400 million to the Federal government’s venture capital fund of fund
– move the Certicom ECC technology into a new entity that is owned by Canada, say, with a licence back to RIM

We’ve always had to be prepared for the day when RIM would be acquired by a foreign buyer. Whether they be from the U.S., Korea, Holland, Japan, or China. That day may be soon upon us.

Unlike Potash (see prior post “Is there a message for Potash in NB Power vote?” Sept 29-10) or the stock exchange (see prior post “Presentation to the Ontario Select Committee on TSX/LSE merger” Mar. 2-11), RIM is just another company, no matter how proud I might be of its place in the Parthenon of technology advancements. I know that Brazil wouldn’t let Bombardier acquire Embraer, and that the Aussies have ring-fenced some of their assets. But if the Federal government has decided that RIM is no different than certain protected Canadian industries (think telecom, banking, publishing, etc.), it’s time to speak up so that we shareholders know whether or not we should be buying or selling on today’s meaty rumour.

MRM
(disclosure – I own RIM; this post, like all blogs, is an Opinion Piece. And, of course, reflects a personal view and opinion and is not meant to represent the views of the TPA, its Board/Staff or the federal government)