Personal Technology

China May Be Rooting for a Lenovo Bid for BlackBerry


As Fairfax Financial’s (FFH:CN) attempt to buy out BlackBerry (BBRY) collapses, add the editors at China’s official newspaper to the list of people talking up a different company’s bid. The China Daily, a mouthpiece of the nation’s government, ran a story over the weekend with the provocative headline, “BlackBerry Ripe for Takeover by Lenovo.”

A deal for the troubled Canadian smartphone producer might be a good fit for the Chinese company, the world’s biggest maker of PCs. Lenovo (992:HK) is trying hard to become more of a force in mobile and has been eyeing Waterloo for some time. Lenovo’s chief financial officer, Wong Wai Ming, told Bloomberg News in January that his company was interested in BlackBerry, and last month the Wall Street Journal reported that Lenovo had signed a nondisclosure agreement to examine BlackBerry’s books.

A Lenovo takeover of BlackBerry wouldn’t go down well in Ottawa or Washington. Canadian Prime Minister Stephen Harper has already warned about national security issues surrounding a BlackBerry sale, and U.S. regulators would surely insist on some other, non-Chinese buyer taking pieces of the company that hold sensitive data.

The upbeat headline in the China Daily is one hint that China’s leaders might want to get another well-known, if tarnished, Western brand under local control. “BlackBerry’s patents and channel partner resources are valuable assets for Lenovo,” the paper quoted an analyst at researcher Canalys as saying.

The newspaper’s story includes a comment from Lenovo’s chairman and CEO, Yang Yuanqing, saying, “we have to prepare enough fodder for the next move.” While he wouldn’t comment on rumors about a BlackBerry deal, he did say “mergers and acquisitions are always useful tools for us to expand business into new markets, and we are open to deals that can boost our business.”

Lenovo has experience rescuing tired tech brands, having purchased the IBM (IBM) PC business in 2005. While Lenovo struggled for a few years after the IBM deal, the acquisition has helped it become the world’s No. 1 PC vendor. Lenovo is by far the top brand in the Chinese market, the largest in the world, selling about one in every three PCs in China. According to Gartner (IT), though, overall PC shipments in China have dropped for six quarters in a row, as Chinese consumers start to shift toward tablets and smartphones. Like BlackBerry, Lenovo could do with a shakeup.

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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Companies Mentioned

  • FFH:CN
    (Fairfax Financial Holdings Ltd)
    • $504.9 CAD
    • -3.38
    • -0.67%
  • BBRY
    (BlackBerry Ltd)
    • $10.31 USD
    • 0.25
    • 2.42%
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