BlackBerry was best known for keyboard-totting smartphones, but their demise in recent years has seen the Canadian firm pivot toward enterprise services, and in particular, cybersecurity. That strategy takes a big step forward today after BlackBerry announced the acquisition of AI-based cybersecurity company Cylance for a cool $1.4 billion.
Business Insider reported that a deal was close last week, and that has proven true, with BlackBerry paying the full amount in cash up front. The acquisition is BlackBerry’s largest ever and it is set to close before February 2019 — the end of BlackBerry’s current financial year — and it will see Cylance operate as a separate business unit within BlackBerry’s business. The company plans to integrate Cylance technology with its Spark platform in the future.
Business Insider’s report suggested Cylance was preparing to go public until BlackBerry swooped in. That suggests BlackBerry wanted Cylance pretty badly — badly enough to part with a large chunk of the $2.4 billion cash pile that it was sitting on prior to today.
Cylance was founded in 2015 by former McAfee/Intel duo Stuart McClure (CEO) and Ryan Permeh (chief scientist) and it differentiates itself by using artificial intelligence, machine learning and more to proactively analyze and detect threats for its customers, which it said include Fortune 100 organizations and governments.
The company has raised nearly $300 million to date from investors that include Blackstone, DFJ, Khosla Ventures, Dell Technologies and KKR. Cylance is headquartered in Irvine, California, with global offices in Ireland, the Netherlands and Japan.
“Cylance’s leadership in artificial intelligence and cybersecurity will immediately complement our entire portfolio, UEM and QNX in particular. We are very excited to onboard their team and leverage our newly combined expertise. We believe adding Cylance’s capabilities to our trusted advantages in privacy, secure mobility, and embedded systems will make BlackBerry Spark indispensable to realizing the Enterprise of Things,” said BlackBerry CEO John Chen in a statement.
Chen has overseen BlackBerry’s move into enterprise services since his arrival in 2013 as part of a takeover by financial holdings firm Fairfax. Initially, things got off to a rocky start, but the strategy has borne fruit. The stock price was $6.51 when Chen joined; it closed Thursday at $8.86 down from a peak of $12.66 in January. While some of the progress has been erased this year, Chen has signed on to retain the top role at BlackBerry until at least 2023, giving him a potential 10-year tenure with the company that was once the world’s No. 1 mobile brand.