Economic Crisis May Prompt Microsoft to Acquire RIM

October 10th, 2008 at 12:00 am

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The financial crisis in the US may be crossing the border to the North. Canadian mobile phone maker Research In Motion (RIM) has been experiencing a downhill drive in their share value thanks to both the competition they are getting from Apple and Google as well as the inevitable economic meltdown in the US. Four months ago, RIM’s stock was sitting pretty at $148 a pop but that value has declined today to the $60 range. This continued decrease may prompt any well-capitalized company to acquire them anytime.

Microsoft is one of those well-capitalized companies with really deep pockets. Regardless of the financial crisis in Wall Street, Microsoft is sure to survive and is in a very good position to buy out technology companies that are gasping for breath in the economic flood. And as Microsoft is struggling to compete against Apple and Google in the mobile phone arena, the acquisition of RIM might be their best option.

The scenario of Microsoft taking over RIM is just an analysis right now and neither RIM nor Microsoft has a comment. However, within some circles, there’s information leaking that Microsoft may have a standing offer to acquire RIM.

"RIM is a massive strategic fit" for Microsoft, said Canaccord Adams analyst Peter Misek. "I’m fairly certain they have a standing offer to buy them at $50 (a share)."

In that case, RIM’s shares should go below at least the $50 mark for Microsoft to make a premium offer. If ever that happens, it would be one of the most high-profile marriages in the technology market.

Rumors of Microsoft’s interest in Waterloo, Ontario-based RIM have swirled in the past, but no deal has ever materialized. A marriage of the two companies would bring together two of the best-known high-tech names in the world and give Microsoft a formidable wireless-handset presence through access to RIM’s roughly 20 million BlackBerry subscribers. [Reuters]

A large obstacle for Microsoft ever acquiring RIM would be the approval of its two CEO’s Mike Lazaridis and Jim Balsillie. The two founders and CEO’s of RIM may resist the acquisition and insist on being an independent company much like Jerry Yang when Microsoft tried to acquire Yahoo this year. Much like Yahoo, a hostile takeovers of RIM may also be a tough move from Microsoft.

Nevertheless, money talks and Microsoft may sweeten the deal for the RIM CEO’s with a cash incentive and still have them stay at the helm of RIM.