Research in Motion Appeals to Certicom's Shareholders

Don't be surprised if Research in Motion Ltd. (RIMM) has more luck with Certicom Corp.'s (CERTF.PK) shareholders than it has had with the company's management.

The Blackberry maker announced on Wednesday that after 10 long and fruitless months trying to persuade Certicom's board that an acquisition would be in its best interest, it's taking the case to shareholders of the encryption software maker.

RIM, which argues that the the two companies' technologies are a natural fit, is likely to receive a warm welcome from Certicom's shareholders: it is offering C$1.50 per share ($1.19 U.S) in cash for Certicom. This might not have looked all that generous a year ago, but in today's depressed market, it represents a $76.5% premium over the company's current share price. The company's stock, which closed Tuesday at 66 cents a share, has risen more than 75% today to around $1.15 U.S. on news of the RIMM offer, but still remains well off its 52-week high of $3.29 U.S.

RIM's public bid for Certicom comes as the company projects third quarter sales and earnings will be lower then previously forecast. The company says the number of new Blackberry subscriber accounts added in the quarter will be around 2.6 million, lower than the 2.9 million it had previously forecast, but still up 57% from the year-ago quarter. -Andrea Orr

See Dec. 3 press release on bid for Certicom from Research in Motion
See Dec. 2 press release on third quarter forecast from Research in Motion

Comments

[Certicom st...:]

You are sorely mistaken if you think 67% of Certicom stockholders will vote for a takeover at anything like the current offer. Several years ago an investment group acquired 10 Million shares for around $2.65 US a share. This group will not vote to sell for less. Ten million shares represents close to 25% of the stock; add management's position (and don't forget that management adopted a "poison pill" anti-takeover program in 1997, which expired in 2007), and there is certain to be more than 33% of stockholders opposed. Moreover, Certicom's recent decline below 1.50 occurred on very low volume and in only 3 months. You have to go back to 2003 to find the stock lower. So the vast majority of non-insider stockholders will also lose a lot of their investment if they vote to take $1.50 Canadian. Finally, as part of the ongoing lawsuit, this Spring, in the midst of discovery, Sony filed a brief challenging validity of Certicom patents, giving weight to the notion Sony devices do infringe. A Sony settlement might be worth $1 Billion = $23/share.

2008 Dec 03 11:14 PM