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BlackBerry Must Be Wary of Security Concerns, Harper Says

BlackBerry Must Be Wary of Security Concerns, Harper Says
A sales consultant prepares a BlackBerry Q10 for display in Toronto, Canada. Photographer: Galit Rodan/Bloomberg

BlackBerry Ltd., which has drawn the interest of foreign companies such as Lenovo Group Ltd., should be wary of a potential takeover that raises national-security concerns, Canadian Prime Minister Stephen Harper said.

Canada would closely examine those issues in any foreign bid for Waterloo, Ontario-based BlackBerry, Harper said in an interview. He spoke in Brussels today after he and European Commission President Jose Barroso announced an agreement in principle on a free-trade deal.

BlackBerry is “a very important player” in the fields of information technology and communications, he said. “So it would be very important that any transactions involving BlackBerry in the future not lead to any concerns about security in that particular area of the economy.”

Harper made the remarks a day after a Wall Street Journal report that Lenovo has signed a nondisclosure agreement with BlackBerry, giving it access to confidential financial data. The Chinese company’s chief financial officer, Wong Wai Ming, told Bloomberg News in January that Lenovo was considering a possible deal with BlackBerry. The Canadian smartphone maker officially put itself up for sale in August, after a new operating system failed to fuel a comeback.

Brion Tingler, a U.S.-based spokesman for Lenovo, declined to comment on the report, as did BlackBerry’s Adam Emery.

Manitoba Deal

Harper’s government blocked a C$520 million ($505 million) deal by Egyptian investors to buy Manitoba Telecom Services Inc.’s Allstream unit earlier this month, citing national-security provisions. That was the third deal that his government had rejected in five years.

BlackBerry has attracted the interest of a Canadian bidder -- Fairfax Financial Holdings Ltd., its largest investor -- though that deal is tentative. Fairfax, a Toronto-based investment firm, agreed to pay $4.7 billion for the company on Sept. 23. At the time, the company didn’t name any other backers of the transaction and hadn’t lined up the financing. BlackBerry has until Nov. 4 to solicit other bids.

Cerberus Capital Management LP, a New York-based private-equity firm, also signed a nondisclosure agreement with BlackBerry and is exploring a bid, a person with knowledge of the situation said this week.

Harper’s cautionary remarks underscore the vital role that BlackBerry’s network of e-mail servers plays within government agencies. BlackBerry’s customers include the Pentagon, the White House and NATO, as well as Harper’s own office.

Blocking Takeovers

Canada has become more aggressive in blocking foreign takeovers in recent years. In 2008, the government rejected a C$1.33 billion bid for MacDonald Dettwiler & Associates Ltd.’s satellite business by Arlington, Virginia-based Alliant Techsystems Inc. That was the first time the country had rejected a foreign takeover since at least 1985. In 2010, a $40 billion hostile offer by Melbourne-based BHP Billiton Ltd. for fertilizer maker Potash Corp. of Saskatchewan Inc. also was blocked.

Harper approved the $15.1 billion acquisition of Nexen Inc. by Cnooc Ltd. of China last year. At the same time, he said further acquisitions of oil-sands businesses by state-owned enterprises would be permitted only under “exceptional circumstances.” The government made changes to the country’s foreign-takeover law in June, giving officials more time to conduct national-security reviews.

BlackBerry shares rose 2.2 percent to $8.38 at the close in New York. The stock remains 94 percent below its 2008 high and is trading well below Fairfax’s $9-a-share offer.

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