[EchoTango]

No doubt it came from the seller...bbry would be foolish to leak anything until done deal... only thing bbry has going for it is the bear market right now....

Posted via CB10

I completely agree. When doing M&A's there is no boundary to the greed that is created. Many of these investors are salivating at the prospect of 300% or even 500% returns which can cause people to do crazy things.

The current market pull-back is a healthy (although frustrating) normal market phase. It might even help BB in this transaction if overall corporate valuations are brought to something more realistic. This was the exact comment Chen made on the last earnings call and clearly he was talking about this deal.

[rarsen]

More opinions on Cylance and BB:

Rumored Acquisition Would Give BlackBerry Stock a Huge Lift
https://www.nasdaq.com/article/rumor...lift-cm1056692
Cylance's effective use of AI and its appeal to large enterprises would definitely help BlackBerry land more deals, meaningfully boosting BlackBerry's results and BlackBerry stock. Additionally, BlackBerry would be able to easily cross-sell its products to enterprises that have adopted Cylance's systems, further improving its top and bottom lines and giving BlackBerry stock another positive catalyst.

[smithm565]

https://seekingalpha.com/article/422...ling-continues

Posted via CB10

[smithm565]

Microsoft: The future of security is AI

https://www.msn.com/en-gb/finance/te...-ai/ar-BBPCxDG



Posted via CB10

[smithm565]

Good read on the need to add AI to an Endpoint Security Strategy. Mostly centered around the growing IOT & EOT market.

https://securityintelligence.com/its...rity-strategy/

Posted via CB10

[rampagingpanda]

Rumors were true! Cylance for $1.4B US

https://www.prnewswire.com/news-rele...300751971.html

[Redzinaldas]

Very interesting how market wil react on this..

[smithm565]

https://techcrunch.com/2018/11/16/bl...security-push/

"Cylance’s leadership in artificial intelligence and cybersecurity will immediately complement our entire portfolio, UEM and QNX in particular. We are very excited to onboard their team and leverage our newly combined expertise. We believe adding Cylance’s capabilities to our trusted advantages in privacy, secure mobility, and embedded systems will make BlackBerry Spark indispensable to realizing the Enterprise of Things," said BlackBerry CEO John Chen in a statement.

Posted via CB10

[W Hoa]

BlackBerry to buy cybersecurity firm Cylance for $1.4 billion

BlackBerry said on Friday it will acquire Cylance, an artificial intelligence and cybersecurity company, for $1.4 billion in cash.

The acquisitions will help expand BlackBerry's QNX unit, which makes software for next-generation autonomous cars.

Besides the cash component, the deal includes the assumption of Cylance's unvested employee incentives, BlackBerry said.

https://www.cnbc.com/2018/11/16/blac...m-cylance.html

[Corbu]

BlackBerry will host an investor conference call beginning at 8:30 a.m. ET, Friday, November 16, 2018. The call can be accessed by dialing (866) 393-4306 and providing Conference ID #2284588 , or live streamed on the company's website at http://ca.blackberry.com/company/investors/events.html.

A replay of the call will be available on November 16, 2018 by dialing (855) 859-2056 and entering Conference ID #2284588 . Additional details on the acquisition and the two companies can be found at BlackBerry.com/Investors.

[Corbu]

Cylance deal

PR:
https://www.blackberry.com/us/en/com...-press-release

IR Presentation:
https://www.blackberry.com/content/d...esentation.pdf

Fact Sheet:
https://www.blackberry.com/content/d...Fact-Sheet.pdf

[EchoTango]

Nice to see some action and market attention for BB. At this point, anything that marginally advances the security software market perception can only be good for the company. I'm not sure about the $1.4B price, but I'm sure the diligence was done and the valuation was validated. Of course the goodwill component will tell what premium was paid to acquire this business. With the term sheet now agreed to, I'm assuming BB will now be able to perform the detail diligence to confirm what the company had earlier indicated was their financial situation.

You've got to trust the assessment was properly done and the value is there to ensure the purchase is a positive one.

[morganplus8]

Did our own John Chen authorize this? This $$$ amount is a major departure from his comments about another "modest purchase" down the road. This is a huge deal, letting go of that kind of money. He has held back for years now and I'm sure he sees some synergies in this deal that go far beyond what the average analyst will see. Great news indeed.

I will add one more thing, we earned nothing on $ 2.4B bucks for so many years, this purchase will see that end for once. Even at modest growth, we'll earn some substantial returns on that money.

[Corbu]

How the media reported it (curated - from oldest to most recent):

https://www.cbronline.com/news/black...or-1-4-billion
https://venturebeat.com/2018/11/16/b...r-1-4-billion/
BlackBerry Jumps Into Security With $1.4B Cylance Acquisition
https://www.crn.com/news/security/bl...lance-for-1-4b
https://www.theregister.co.uk/2018/1...uires_cylance/
https://www.itworldcanada.com/articl...cylance/411937
https://nypost.com/2018/11/16/blackb...lists-cylance/

[W Hoa]

Still $1 billion in cash and cash equivalents after this purchase. Could see an additional acquisition.

[Corbu]

Still $1 billion in cash and cash equivalents after this purchase. Could see an additional acquisition.

Good point W Hoa.

But am I missing something? You surely, $1B Cash&Equiv. - USD$605M of 3.75% debentures. Is that right?

[drobbie]

Still $1 billion in cash and cash equivalents after this purchase. Could see an additional acquisition.

Good use of cash in this instance. Hopefully the synergies will materialize and be cash flow positive in short order.

[W Hoa]

But am I missing something? You surely, $1B Cash&Equiv. - USD$605M of 3.75% debentures. Is that right?

Yes, the debt remains. But the $1 billion is available.

[smithm565]

Has anyone else been following FB?

The stock is stuck in a downward spiral and the constant bad press and political pressures are adding up. Would be nice to see them decide to clear one thing up & settle with BB soon.

Maybe Chen knows more than he wants to say and that makes it much easier to drop $1.4 billion?

Posted via CB10

[Corbu]

Morgan Stanley

James E Faucette

November 16, 2018 05 :27 PM GMT

BlackBerry Ltd | North America

BlackBerry Announces Intent to Purchase Cylance for $1.4bn

With security remaining a major barrier to IoT proliferation, BlackBerry acquires next-gen endpoint security company Cylance to bolster their platform.

Building out secure IoT platform to remove barriers to adoption. BlackBerry’s announced acquisition of Cylance helps bolster its Spark cybersecurity platform as it expands onto a growing number of devices. Cylance is a next-gen endpoint security company, that uses artificial intelligence and machine learning to predict and prevent attacks on endpoints. As noted in a recent Gartner study, the biggest technical barrier to IoT adoption today is security. This market need for security on a growing number of devices has allowed Cylance to accumulate 3,500+ customers to date, including more than 20 % of the Fortune 500. BlackBerry envisions that the addition of Cylance to their portfolio will create a platform that can protect endpoints or all sorts from chip to the edge across the security life cycle.

Transaction a departure from M&A parameters over past few years, but for higher growth asset. Over the past few years BlackBerry has focused on acquisitions at <5x EV/NTM Sales (e.g. Good Technology, AtHoc, WatchDox, Movirtu, Secusmart), most well under. Cylance is a bit of a departure from that, with BlackBerry expecting the cost of the transaction will be <7x EV/NTM Sales, implying 50 %+ growth for Cylance in the coming year. For context, BlackBerry noted that Cylance had $130mm of revenue in FY18 (April FYE), the result of ~90 % growth over the previous year. This multiple is in-line with what we have seen from other software M&A this year, as noted in "Reading Through the M&A Tea Leaves – 1H 2018 Update" earlier this year.

Deal logistics. BlackBerry will be paying $1.4bn in cash, plus the assumption of unvested employee incentive awards, for Cylance. The transaction is expected to close prior to the end BlackBerry’s current fiscal year (Feb 2019) and will be financed with cash on hand (BlackBerry had ~$2.3bn in cash prior to transaction). Cylance will operate as an independent business unit within BlackBerry, and currently has 300+ software engineers and data scientist and ~100 patents in cybersecurity and machine learning. Stuart McClure, CEO of Cylance, will continue to serve as lead of this business unit, but John Chen will continue as CEO of BlackBerry and the combined company. While no revenue or cost synergies given, the company expects the transaction to be accretive to earnings within a year, generating cash as a combined company in a "short period of time".

[W Hoa]

John Chen interview on BNN Bloomberg:

https://www.bnnbloomberg.ca/blackber...lion-1.1169395

Chen said in the interview, when asked about Cylance growth prospects, that he couldn't answer until the deal is fully closed. However he did say that at Cylance's fiscal year end in April 2018 that revenue increased by 90% for that year and that it is tracking at high double digits for this fiscal year.

Amber asked if Chen was anticipating any further acquisitions and he replied that nothing major was on the horizon but if a smaller opportunity fit with the company's goal then they would look at it.

[Corbu]

Cylance Smart Antivirus

https://shop.cylance.com/us

[W Hoa]

Partners: BlackBerry Must Lay Out Vision For Cylance, Accelerate R&D Roadmap

"Cylance just got more legitimacy as to who they are than any other player in the market,"

https://www.crn.com/news/security/pa...te-r-d-roadmap

[rarsen]

More reasons on the WHY:

8 Things You Need To Know About The $1.4B BlackBerry-Cylance Deal
https://www.crn.com/slide-shows/secu...cylance-deal/1

[Seadog83]

Partners: BlackBerry Must Lay Out Vision For Cylance, Accelerate R&D Roadmap

"Cylance just got more legitimacy as to who they are than any other player in the market,"

https://www.crn.com/news/security/pa...te-r-d-roadmap

Who is this dufus?

"I just don't see BlackBerry as a prominent force in the security market," the partner told CRN. "I was hoping that Cylance would be acquired by someone that would make a one-plus-one equals three type of equation."

Oh you mean sort of like word for word what your boss said about this exact transaction?

The Cylance partner who didn't wish to be identified was also concerned about Cylance and BlackBerry being at different stages in the innovation lifecycle. Cylance is seen as ahead of the curve from an artificial intelligence and machine learning perspective in the endpoint security space, the partner said, while BlackBerry has a very different reputation.

"I don't understand the relevance in terms of how it [Cylance] fits into where BlackBerry is going and how they're doing."

Because you're apparently using your mindset of what BB was 8 years ago as the foundation of your understanding.

"As I understand it, 3M, or Minnesota mining and manufacturing co, is prominent in the digging ore out of the ground business. I just don't understand what the hell they are thinking investing all this money into adhesives and material sciences and how it relates to their core concern"