14 DAY TRIAL // Certicom Corp, the security software maker, announced recently that Research In Motion, the maker of BlackBerry, had placed a higher bid than VeriSign Inc previously did for the purchase of the software company. According to Certicom, RIM doubled its initial offer, and now it would be willing to pay C$131.1 million for the acquisition, or C$3 per share in cash, which translated into 43 percent more than VeriSign's bid.
Blackmont Capital analyst Lawrence Rhee stated that it was rather unlikely to see VeriSign bid more in this takeover tug-of-war, mainly due to the fact that RIM’s richer offer shows its commitment to acquiring Certicom. At the same time, VeriSign has until February 11 to place another offer as stipulated in its previous arrangement with Certicom.
“They could notch it up higher, but I just think VeriSign thinks that RIM will come and outbid it again. So why go through that process,” stated Rhee. “I think they’re both motivated to try and purchase this asset, it’s just I think RIM has proven that they want it more.”
On the other hand, VeriSign should receive a C$4 million termination fee in case Certicom does not accept its bid, according to their agreement. RIM, on the other hand, does not seem to look at the money when it comes to purchasing Certicom.
According to Rhee, “One of RIM's competitive advantages since inception has been the strength of their security. That's why many governments, especially the U.S. government, use BlackBerrys. Because BlackBerrys have never been compromised.”
Ontario-based phone maker RIM dropped its initial C$1.50 a share offer for Certicom after the security company got a court order blocking the bid. RIM was accused of violating nondisclosure agreements while making its bid by using confidential information.
“I wouldn’t say it’s all Certicom’s technology that explains the strength of the security around RIM. I think it’s a key component. I think what RIM wants is to be able to ensure continued development of ECC going forward. If it gets into a competitor’s hands … then maybe RIM would be worried,” stated Rhee.