Intelligent security software and services provider BlackBerry Limited (NYSE: BB) recently revealed that it has entered into a patent sale agreement to sell its non-core patent assets to Catapult for $600 million.
Shares of the company reacted positively to the news and rose 4.9% on Monday. The stock, however, declined marginally to close at $8.16 in the extended trading session.
Implications of the Deal
Catapult is a special purpose vehicle formed to acquire the BlackBerry patent assets. Under the terms of the sale agreement, BlackBerry will receive a license back to the patents being sold, which relate primarily to mobile devices, messaging, and wireless networking. The transaction will have no impact on Blackberry’s existing customers.
Blackberry will receive the consideration of $600 million in the form of $450 million in cash and a promissory note in the principal amount of $150 million. The promissory note will be payable in five equal annual installments of $30 million in cash, commencing on the third anniversary of the closing date.
Consensus among analysts is a Moderate Sell based on 1 Hold and 3 Sells. The average Blackberry price target of $7.74 implies downside potential of 5.9% from current levels. Shares have declined 43.8% over the past year.
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Blackberry’s performance this quarter.
According to the tool, Blackberry’s website recorded a 31.15% monthly fall in global visits in December, compared to the same period last year. However, year-to-date, the website traffic has grown 31.04%, compared to the previous year.
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