BlackBerry (BBRY) may have gotten a bargain when it acquired mobile-security software company Good Technology last year for $425 million, but shareholders of the software startup aren’t so pleased, lodging an amended lawsuit in Delaware Chancery court against J.P. Morgan, which advised Good Technology in its sale.
According to The New York Times, citing the lawsuit, the plaintiffs contend J.P. Morgan was “self-interested,” and “conflicted” when advising Good Technology to sell to BlackBerry at what the suit refers to as a “fire-sale price.” The shareholders claim at the same time that J.P. Morgan was advising Good Technology, it was also providing advice to BlackBerry and put its relationship with BlackBerry ahead of Good Technology. The Times noted that Good Technology, which was valued at around $1 billion by its investors at one time, sold for a low price even though documents obtained by The Times showed there were other would-be buyers that made higher offers. The plaintiffs say J.P. Morgan used the Good Technology deal to win future BlackBerry business. (See also: President Obama Finally Drops BlackBerry.)
The amended complaint said that in 2014 and 2015, J.P. Morgan’s lead banker and his colleagues on the Good Technology deal were engaged in what the investors described as a “full-court press” to gain BlackBerry business, including a series of meetings and pitches with executives at BlackBerry. The wooing continued even after it was clear BlackBerry was interested in acquiring Good Technology, the lawsuit stated. In an interview with The Times, Randall Baron, a lawyer for Good Technology shareholders said “on many fronts J.P. Morgan was using Good Technology and the dire straits its conflicted directors put it in, to benefit the bank immediately and in the future.” The lawyer said J.P. Morgan was able to make “substantially more money on a sale to BlackBerry than on a transaction that would have been better for the company [Good Technology] like a public offering.” Both J.P. Morgan and BlackBerry declined to comment on The New York Times report.
Before Apple and Alphabet’s Google came on the scene, BlackBerry was the dominate player in the mobile communications market. It has since fallen from grace and has been in reorganization mode for some time. Earlier this summer, the company announced it would stop making the BlackBerry Classic, instead opting to focus on devices that support its own BB 10 platform, as well as those that run on the Android OS.
[Source:-Investopedia]
