TORONTO Canada's BlackBerry Ltd (BB.TO) said on Friday it will buy rival mobile software provider Good Technology Corp (GDTC.O) 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 (AAPL.O) 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.
"There is a very long history here. We are in an incredibly competitive market and speak to many of the same customers," said Good Chief Executive Christy Wyatt in an interview posted on BlackBerry's news site.
Wyatt said her company's technology would boost BlackBerry's ability to manage "Internet of things" devices, supporting wearable technology such as the Apple Watch and Android-based competitors.
BlackBerry has recently made acquisitions to expand its services business, and in July Chen said the company would likely make more. On Friday, he compared the acquisition of Good with previously announced deals for Secusmart, Movirtu and WatchDox.
J.P. Morgan Securities LLC and Bank of America Merrill Lynch advised Good on the deal, BlackBerry said.
(With additional reporting by Anannya Pramanick in Bengaluru; Editing by Anil D'Silva and Chizu Nomiyama)