RIM could be M&A hot property

Dylan Bushell-Embling
24 Aug 2011

The biggest wave of deals for mobile-phone assets in more than a decade may help Research In Motion’s shareholders almost double their money in a sale.

Led by Google's takeover of Motorola Mobility's and Nortel’s patent auction, acquisitions of wireless and telecommunications equipment makers may top $27 billion this year and approach the record in 1999, according to data compiled by Bloomberg.

After Google agreed this month to pay a dot-com era premium for Motorola and its patents, RIM, maker of the BlackBerry, may now be worth almost $25 billion, an estimate from Morgan Keegan & Co showed.

Once pegged at $83 billion, RIM's valuation has declined as Apple’s iPhone and Google’s Android platform lured away smartphone customers. With Google gaining Motorola’s handset business, RIM may now attract interest from Samsung and Microsoft, Stewart Capital said. A buyer would get a smartphone maker that is still dominant among corporate clients, runs its own operating system and offers greater security with its own e-mail servers. Paying twice RIM’s value of $13.5 billion would still be a discount to rivals.

“It gives a potential acquirer scale and share in a market that’s rapidly being dominated by Google and Apple,” said Malcolm Polley, who oversees $1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania. Buying RIM makes sense for Samsung because “Google all of a sudden has become a competitor,” he said.

“It might be valuable for someone like Microsoft that’s trying to make inroads into the handheld space,” he said.

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