It is a quintessential takeover battle that RIM -- the company that produces the BlackBerry -- has been fighting for the past two months. But it seems that if the price is right, the world's most popular push-email service for hand-helds may be able to bag Certicom Corp, the Mississauga, Ontario-based mobile e-business security provider after all.
The erstwhile reluctant management of Certicom Corp, announced today that its Board finally feels RIM's latest offer -- announced on February 3 -- to acquire Certicom for Canadian $3.00 per share is a "superior proposal" and if the price is right, the present Certicom management may allow the company to be taken over by RIM.
"Certicom's Board of Directors and the Special Committee of independent directors are working to ensure the process is fair and that it delivers maximum value for our shareholders," said a company spokesperson in response to my queries adding that although "the first offer from RIM was hostile only in the technical sense in that it was an unsolicited offer. Certicom's Special Committee of Independent directors is currently reviewing a friendly RIM offer."
The source added that its "Board of Directors and Special Committee of independent directors are working with financial advisors TD Securities for conducting a process to maximize value for shareholders and ensure a positive outcome for the company."
Indeed for RIM these words may be music because the encryption technology solution provider based on Elliptic Curve Cryptography (ECC), Certicom is a coveted company that is also being wood by VeriSign Inc.
The ECC technology, developed by Certicom, is what Certicom calls a next generation public key encryption technique that can be used to create faster, smaller, and more efficient cryptographic keys. ECC generates keys through the properties of the elliptic curve equation instead of the traditional method of generation as the product of very large prime numbers. The technology can be used in conjunction with most public key encryption methods, such as RSA, and Diffie-Hellman.
Some say ECC can yield a level of security with a 164-bit key that other systems require a 1,024-bit key to achieve. Because ECC helps to establish equivalent security with lower computing power and battery resource usage, it is becoming widely used for mobile applications.
"This technology is highly valued and used by companies across all industries, including IBM, Qualcomm, Texas Instruments, Motorola, Samsung, RIM Continental Airlines, and the National Security Agency," says the Certicom official.
Small wonder then, that for both BlackBerry and Verisign, Certicom would be a prized possession. While providing intrusion-proof push email service is a guarantee that BlackBerry thrives on, for VeriSign that enables and protects billions of interactions every day across the world's voice, video and data networks, Certicom's technology is equally coveted.
Right after RIM made its first of C$1.50 per share-amounting to C$66 million offer -- that Certicom turned down as "hostile" -- VeriSign started chasing Certicom by making a counter offer of C$2.10 per share.
However, for RIM, Certicom may be a must-have. Not only has "Certicom provided the encryption technology to RIM since 1998 and has had a long and mutually beneficial relationship," as says the Certicom official. But RIM's security policy does not allow any third party or even the company to read the information transferred over its network. In that sense it is imperative for RIM perhaps to have absolute control of the encryption technology ehind the BlackBerry.
Still, even as the balance tilts in RIM's favor -- at least as of now -- Certicom is not going to be an easy catch. Certicom wants to ensure that it gets the best deal in the current tug-of-war.
"If Certicom determines that the RIM Offer is a superior proposal as defined in the VeriSign agreement, VeriSign will have the right, but not the obligation, to offer amended terms within a period of five business days," said a company statement.
Certicom also adds that "If the Board determines that the RIM offer does not continue to be a Superior Proposal, the Board will promptly reaffirm its recommendation of the VeriSign Arrangement and enter into an amended arrangement agreement with VeriSign."
And if VeriSign does not offer to amend the terms of the VeriSign Arrangement, Certicom has retained the right to enter into the arrangement agreement with RIM, subject to certain conditions including the payment of a C$4 million termination fee to VeriSign.
Don't you wish you owned some Certicom shares?
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