It was recently announced that the Chinese consumer technology firm called Lenovo Group has signed a non-disclosure agreement with Canadian smartphone maker BlackBerry in preparation for making a bid to purchase the struggling business. Lenovo is perfectly aware that it will not have the option of taking over the Canadian firm. Any sale, which is made to a company that’s controlled by Beijing, is automatically blocked by the American and Canadian authorities. The takeover is not permitted even in the case of indirect control that pertains to Lenovo. Thus, the question remains, why does Lenovo bidding for BlackBerry when it cannot take over?
The highest probability is that the government officials of China wish to destroy the company in the same way that they had destroyed Nortel Networks, another Canadian company in the last decade. For almost a decade, Nortel had been hacked by the Chinese and they had gained access to everything that was stored on the company’s internal networks. Therefore, the company was underbid by the Chinese in all global markets and the company had declared bankruptcy in 2009. The company had then been split and its parts had been sold off individually. Nortel had been a pretty easy target.
On the other hand, BlackBerry is not such a piece of cake. It has been noted by analysts that the one phone that Chinese have not been able to hack is BlackBerry. Therefore, it is highly unlikely that they have gained access to the internal networks of the company. Hence, because they haven’t been able to get into the company’s system through the back door, what better option than to enter from the front? As a matter of fact, Lenovo is using the main entrance and showing an interest in making a bid for the company. By doing so, the Chinese company will have the opportunity of combing through the books of BlackBerry.
Ottawa has the ability of blocking any acquisitions by foreigners because of the Investment Canada Act and other regulations. It is therefore, certain that Lenovo will not be permitted to take over the company as the Canadian government will use its power. Firstly, classified networks in the US and Canada have already banned the equipment of Lenovo and the same has been done in some other countries like New Zealand and Australia. Secondly, there is a hostile mood in Ottawa in regard to acquisitions by other countries.
Three proposed takeover attempts were rejected by the current government since it came to power in 2006. Thirdly, the bid from Lenovo is highly sensitive and it has already been refused. Despite all the recent troubles that have been plaguing BlackBerry, its phones still remain the top choice for all Canadian government officials as well as their American counterparts. Majority of the government departments use BlackBerry phones and almost a million smartphones were used at the end of 2012 by the Federal and state employees. Even President Obama uses BlackBerry and is said to be addicted to his device.