BlackBerry Ltd.’s pending $1.4 billion acquisition of Irvine-based security software maker Cylance Inc. has crossed its first hurdle.
The transaction passed the mandated waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, signaling it won’t face objections via U.S. antitrust law.
Since BlackBerry (NYSE: BB) is a Canadian company, the deal is now being weighed by the Committee on Foreign Investment in the United States, or CFIUS, an interagency committee which reviews some foreign transactions involving U.S. companies. In recent years, other OC companies faced similar scrutiny, such as when Broadcom was sold to Singapore-based Avago Technologies Ltd. and Ingram Micro by China’s HNA Group Co.
“We anticipate receiving comments by the end of January,” BlackBerry Chief Executive John Chen said last month in a conference call with analysts following the release of its fiscal third-quarter report on Dec. 20.
Chen expects the deal to close “shortly after,” he said.
Under the agreement, Cylance will act as a stand-alone subsidiary and most likely report as a separate business line, according to Chen.
That could indicate some good news for its local operation, which employs about 400 at its headquarters at 400 Spectrum Center Drive. The company closed the year with about 950 workers worldwide.
Chen also signaled he’ll give Cylance room to go after market share from big cyber players McAfee LCC and Symantec Corp., as BlackBerry integrates its end-point detection applications that made Cylance one of the most coveted companies in the industry.
Cylance’s software combines machine learning, artificial intelligence algorithms and the cloud to thwart new and evolving threats and cyberattacks before they hit servers, desktops and virtual desktops.
“Cylance is itself a high growth entity in their own business and no doubt that they are the standout on the EPP protection using AI technology,” he said. “And they are highly competitive against replacing the old signature based technology, which are Symantec and McAfee. I’m still pursuing those opportunities obviously.”
Cylance products are used to protect more than 15 million internet-capable computer hardware devices for over 3,500 corporate subscribers, including Dell, Gap Inc. and Panasonic Corp.
The $1.4 billion sales figure represents a multiple about 11 times higher than Cylance’s last fiscal-year revenue of $130 million. Cylance grew revenue more than 90% in the 12 months through April.
BlackBerry posted revenue of $226 million in the November quarter, flat year-over-year, and net income of $59 million, compared with a loss of $275 million in the year prior.
IM to Apollo Buzz
Apollo Global Management LLC, an alternative investment manager with $270 billion in assets under management, has been in talks to buy Ingram Micro Inc., the Irvine based unit of Chinese conglomerate HNA Group Co., the Wall Street Journal and Reuters reported last month.
Apollo’s offer was too low, the WSJ said, citing unidentified people familiar with the matter. HNA is seeking $7.5 billion, including the assumption of $1.5 billion in debt. HNA, which is trying to raise cash to pay off debt, paid $6 billion for Ingram Micro in 2016.
HNA has been shopping Ingram Micro in the past year, according to numerous news reports. A Business Journal analysis published in September suggested a buyer could purchase it for as low as $5 billion.
Ingram Micro, one of the largest distributors of personal computers and other technology products, reported sales of $35.6 billion for the nine months ended Sept. 29, up 8.2% year-over-year.
It’s OC’s largest company by sales.
