China's Lenovo seeks to acquire Blackberry-maker RIM

Jan 26 2013, 01:05 IST
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The Chinese company would also encounter tough regulatory scrutiny in Washington, cybersecurity experts say. (Reuters) The Chinese company would also encounter tough regulatory scrutiny in Washington, cybersecurity experts say. (Reuters)
SummaryThe Chinese company would also encounter tough regulatory scrutiny in Washington, cybersecurity experts say.

long shot at the best.'

NET BENEFIT TEST

Any bid for RIM would face a rigorous review by the Ottawa to determine whether the deal would bring a "net benefit" to Canada. The Investment Canada Act gives the government the authority to kill deals that could harm Canadian interests or threaten the country's national security.

In response to the comments by Heins, Canada's Industry Minister Christian Paradis told Reuters earlier this week that Canada may even go to the extent of reviewing a sale of RIM's handset business if such a deal was proposed.

"Research in Motion has made an important contribution to information and communications technology in Canada, a sector that is so important to the Canadian economy. We hope they continue to do so well into the future," Paradis said in an emailed response to the Lenovo comments on Thursday.

Lenovo's acquisition trail over the past few years, such as the purchase of Germany's Medion in 2011 and IBM's PC business in 2005, has sparked market talk that it could be interested in handset makers such as RIM and Nokia Oyj.

Lenovo executives have denied on separate occasions last year that there were such plans.

Cybersecurity experts said Lenovo would likely go up against tough U.S. government scrutiny as well since the Defense Department and other agencies rely on the Blackberry, which is considered more secure than other smartphones.

Should Lenovo acquire RIM, it could lose a major client - the U.S. government - as U.S. officials would be reluctant to use products owned by a Chinese company due to national security concerns, analysts say.

"A potential acquisition of RIM by Lenovo would raise a number of important security issues," said Michael Wessel, a Commissioner on the U.S.-China Economic and Security Review Commission, appointed by Congress.

"Government employees are one of the largest users of RIM's BlackBerry products and the security of their communications has to be of paramount concern," said Wessel, adding that he was speaking on behalf of himself and not the Commission.

After the comments from Lenovo, a RIM spokesman said the company had nothing new to report on its strategic review.

RIM shares closed 2.2 percent higher at $17.74 on Thursday the Nasdaq. The Toronto-listed shares closed 2.9 percent higher at C$17.80. RIM is a volatile stock, and moves of 3 percent and more are not uncommon.

Its shares are down almost 90 percent from an all-time high of over $148 in 2008, but the stock

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