Shares in smartphone company BlackBerry soared by almost 30 per cent on Wednesday (January 14th) following news of a potential takeover from Samsung.
The Korean firm has moved to purchase its struggling rival and is ready to pay as much as $7.5 billion (£4.92 billion). News of this movement triggered huge investor interest in BlackBerry and saw shares spike by 29.71 per cent at the close of trading on the US stock market. Reuters reported that executives from Samsung and BlackBerry have already met to discuss a possible deal.
BlackBerry has been struggling to keep up with competitors such as Apple and Samsung in the smartphone sector. While its handsets were once highly popular across the globe, the rise of the iPhone and Galaxy series has seen their circulation diminish leading to financial problems for the company.
In December, BlackBerry announced a larger-than-expected fall in revenue during the third quarter of the year. The company reported revenues of $793 million, a significant drop from the $1.19 billion recorded earlier in the year. While chief executive John Chen described the results as "not satisfying" he was hopeful that the company company will be able to stabilise in 2016.
The potential deal with Samsung could represent a major coup for BlackBerry's shareholders. The company said in an email that it was "aware of certain press reports" about a potential agreement but, contrary to Reuters report, it had "not engaged in discussions with Samsung with respect to any possible offer to purchase".
BlackBerry once boasted a 50 per cent share of the smartphone market in the US but this has since fallen due to the rise and popularity of both Apple and Samsung models. There has also been a shift towards touchscreen devices as opposed to the keypad option, which made the BlackBerry handsets unique.
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.