UPDATE 2-BlackBerry to buy rival Good Technology for $425 mln

Fri Sep 4, 2015 10:12am EDT
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(Adds quote, detail from conference call, market reaction and context on both companies.)

By Allison Martell

TORONTO, Sept 4 (Reuters) - Canada's BlackBerry Ltd said on Friday it will buy rival mobile software provider Good Technology Corp for $425 million, to boost its ability to help corporate clients manage smartphones running on different operating systems.

The cash deal may help BlackBerry, a one-time smartphone pioneer, win new customers for its services business, a priority as it shifts focus to device management software for enterprise customers. More than half the devices running on Good's systems are Apple Inc products such as the iPhone.

BlackBerry said it expects to realize about $160 million in revenue from the acquisition in the first year after the deal closes, expected by late November. Its Toronto listed shares were up 1.1 percent at C$7.97 in early trading.

On a call with analysts and investors, BlackBerry Chief Executive John Chen was asked about Good's cash burn. He promised that BlackBerry would remain cash flow positive overall.

"There obviously will be hard work involved," he said. "But I do see a lot of opportunity here to drive value for our shareholders."

Chen said BlackBerry will maintain both company's products as it develops a unified platform that customers can upgrade to. He said that a unified product may take a year or two.

Relations between BlackBerry and Silicon Valley-based Good had long been tense. The companies settled a series of patent lawsuits in 2004, but as recently as January 2015, BlackBerry critiqued one of Good's product announcements in a blog post, annotating the rival company's press release in red ink.   Continued...