RIM Trumps VeriSign in Certicom Bidding Battle
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Canadian security vendor Certicom is expected to accept Research in Motion's US$106.5 million takeover offer today, ending a bidding war between the BlackBerry maker and security player VeriSign.
The battle prompted RIM (NASDAQ: RIMM) last week to top its initial, unsolicited offer, originally made in December -- a hostile takeover that Certicom initially resisted and ultimately won a court injunction to stop.
In the interim, VeriSign emerged as a second potential suitor and succeeded in signing a merger agreement with Certicom for US$73 million. However, in the face of RIM's newest offer, VeriSign (NASDAQ: VRSN) said today that it's dropping out of the running.
Now, Certicom's board is expected to meet today to announce formal acceptance of RIM's bid, according to a statement from the company. The BlackBerry manufacturer's US$106.5 million offer represents a premium of approximately 147.1 percent over Certicom's closing price on Dec. 2 -- after which RIM made its original bid -- and a premium of approximately 25.7 percent over Certicom's closing price on Jan. 22, after which VeriSign joined in the bidding.
The news comes as smartphone players aim to enhance their handsets' features, such as security, to drive deeper enterprise adoption of mobile devices. RIM, the top enterprise player, is aiming to expand its traction in the government sector, which requires higher-grade security technologies. Certicom's technology has already found fans among government buyers, having been adopted by the National Security Agency.
Certicom said it would have to pay a US$3.2 million termination fee to VeriSign for terminating its merger agreement once it agrees to sell to RIM. Certicom spokespeople declined further comment, and spokespeople from RIM declined to comment.
RIM currently licenses the 23-year-old company's Elliptic Curve Cryptography (ECC) technology, a form of public-key encryption, which is licensed to other major tech firms including IBM, General Dynamics, Motorola and Oracle, according to Certicom.
Today's announcement also marks the final chapter of an acquisition effort that kicked off in December when RIM made its first unsolicited offer of US$55.3 million, or US$1.20 per share. The bid had been spurned by Certicom, which charged that RIM used its existing contact with the company to gain the upper hand in negotiations and in timing the deal, in violation of non-disclosure agreements.
A court sided with Certicom on Jan. 19, granting it a permanent injunction restraining the $1.50 hostile takeover bid.
Just four days later, VeriSign offered about US$1.69 a share, and the two companies entered into a deal. In a statement at the time, VeriSign said the acquisition would give it a leadership position in cryptography technology.
Last week, RIM responded with its latest offer of US$2.45 per share, or US$106.5 million. The next day, Feb. 4, Certicom notified VeriSign that RIM's offer was a "superior proposal" and terminated its agreement with the Internet infrastructure giant.
Update adds comment from VeriSign.