RIM’s Takeover Talks Grow Stronger as Amazon, Microsoft Take Closer Look

by Trefis Team
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Trefis
RIMM
Research in Motion
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Research in Motion’s (NASDAQ:RIMM) stock has declined so much during the course of last year that it has once again become an attractive acquisition targets for other mobile phone companies such as Microsoft (NASDAQ:MSFT) and Nokia (NYSE:NOK), and even Amazon (NASDAQ:AMZN). Reuters reported Tuesday that RIM turned down takeover offers from Amazon and other potential buyers and is opting to fix its own problems. [1]

After this report, RIM’s stock jumped by more than 10%. Another report by Wall Street Journal mentioned that Microsoft and Nokia are mulling about the idea of making a joint bid for RIM, although the status of the talks remain unclear. [2] Despite management’s stubbornness and inability to right the company so far, investors are left wondering at what point can management’s hand be forced to accept a bid?

See our complete analysis for RIM stock here

Management unwilling to budge

The huge decline in RIM’s stock this year has done no favors to its shareholders. Its stock has declined from the high of $70 this year to $14 as of today, which is making the shareholders increasingly frustrated with the performance of the management. Shareholders have started asking for a stake sale or a management overhaul at the company, although the their unwillingness so far had stymied this progress.

Shareholders’ grows support for company’s shake-up

RIM may soon face a fresh round of calls for management reforms from its major shareholder Northwest & Ethical Investments LP (NEI) (see Shareholders Get Another Crack at Replacing Management in January). A few months back, activist shareholder Jaguar Financial Corp said that it has the backing of around 8% of the company’s investors supporting it in its campaign to urge the BlackBerry maker to sell itself, seek a merger partner or split itself into a number of companies. [3]

The only hurdle for the shareholders for a complete management overhaul will be to overcome the control that the management holds on the company. The two co-CEOs Balsillie and Lazaridis own a combined 11% of the company shares and their approval will be a very important factor.

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Notes:
  1. Amazon weighed buying RIM, interest cooled, Reuters, December 20th, 2011 []
  2. Microsoft, Nokia Flirted With RIM, Wall Street Journal, December 21st, 2011 []
  3. Jaguar Says Support Grows for a RIM Shake-up, Reuters, Oct 11th, 2011 []
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