Why BlackBerry Ltd Stock Skyrocketed Today

By Steve SymingtonFool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What:Shares of BlackBerry Ltd popped nearly 30% late Wednesday after Reuters reported Samsung is mulling a takeover of the beleaguered smartphone maker.

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So what:Specifically, the report cites a "person familiar with the matter and documents seen by Reuters" indicating executives from both companies met last week to discuss a potential acquisition. Samsung, for its part, proposed an initial per share price range of $13.35 to $15.49, representing a premium of 38% to 60% over BlackBerry's trading price just prior to the news. The high end of that range would imply an enterprise value of roughly $7.5 billion, according to the documents, assuming conversion of $1.25 billion of convertible debt.

Now what: It's no mystery BlackBerry is struggling to compete in the handset market, having shipped only 2 million smartphones in its most recent quarter. So it's more than likely Samsung is after BlackBerry's market-leading enterprise solutions including BES12, which incidentally stood at the center of a new software partnership the two companies announced almost exactly two months ago.

At the same time -- and however strong Samsung's interest -- such acquisitions are never guaranteed to actually happen. Given that risk, that's why I think BlackBerry investors would be wise to at least consider taking some of their newly won profits off the table.

The article Why BlackBerry Ltd Stock Skyrocketed Today originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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