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BlackBerry to buy cybersecurity company Cylance for US$1.4B [UPDATED]

BlackBerry made its name as a smartphone pioneer, but has shifted in recent years to software and security services; the company is calling this the largest deal in its history


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PHOTO: Blackberry Network Operations Centre, Waterloo, Ont./Blackberry

TORONTO—BlackBerry Ltd. has signed a US$1.4-billion deal to acquire U.S. artificial intelligence and cybersecurity company Cylance in what the company called the largest deal in its history.

BlackBerry executives told analysts on Friday that they were keen on acquiring California-based Cylance because it is a pioneer in applying artificial intelligence, algorithmic science and machine learning to cybersecurity software.

The acquisition helps solidify BlackBerry’s shift away from its past life as a smartphone company to software and security services, including its QNX business, which is focused on the automotive sector.

“I’m very excited about today’s news because this acquisition did two things for us,” said John Chen, BlackBerry’s executive chairman and chief executive.

“First, it will provide BlackBerry with additional cybersecurity capabilities with state-of-the-art artificial intelligence and machine learning technology, that could be utilized across our entire portfolio…Secondly, it’s the key investment to our future software and services growth in the enterprise market.”

The deal, which is pending regulator approvals but is expected to close by the end of February 2019, will also involve BlackBerry assuming Cylance’s unvested employee incentives.

Under the agreement, Cylance will continue to operate as a separate business.

Cylance was founded in 2012 by former McAfee/Intel employees Ryan Permeh and Stuart McClure. It says it has 3,500 enterprise customers, including more than 20 per cent of Fortune 500 companies.

McClure, Cylance’s chief executive and chairman, said he feels BlackBerry and his company complement each other and share a vision of securing and connecting every endpoint—a technology term used to describe the connections to the internet—in the world.

He said Cylance offers BlackBerry a mathematical approach to cybersecurity because it uses artificial intelligence prediction and computers trained to process million and millions of files and tasks to uncover the DNA of attacks and prevent them.

BlackBerry chief financial officer Steven Capelli said he believes that adding Cylance’s predictive technology will drive synergies, but cautioned investors about it having a huge impact on earnings.

“What’s nice is we have complementary verticals, and we’ll work to communicate with one another, but by and large, until we have the platform developed, we don’t expect a lot of revenue synergies.”

News from © Canadian Press Enterprises Inc. 2016

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