BlackBerry-maker Research In Motion ( RIMM) has dropped its $53 million bid for Canadian security specialist Certicom ( CIC.TO) after an Ontario court blocked its hostile takeover. RIM confirmed that it had pulled its bid in a statement late Tuesday, citing the Ontario Superior Court of Justice's ruling. The court granted a permanent injunction restraining the bid earlier this week, according to a Certicom press release. The wireless security specialist had applied for the injunction, claiming that RIM had breached nondisclosure agreements entered into by the two firms in 2007 and 2008 by using confidential and proprietary Certicom information for its takeover bid. RIM launched its Certicom bid in December through one of the smartphone specialist's subsidiaries. The move could have bolstered RIM's ability to secure Internet data and potentially squeeze the competition. Certicom develops a technology called Elliptic Curve Cryptography (ECC), which is used to secure data on a range of devices, including smartphones. The National Security Agency uses the same technique, and Certicom licenses its technology to a range of companies, including IBM ( IBM), General Dynamics ( GD), Motorola ( MOT) and RIM. From the outset, however, Certicom resisted RIM's bid to acquire the company and its intellectual property. In late December, for example, the Mississauga, Ontario-based firm's board urged its shareholders to reject the takeover, arguing that the $1.21 a share bid significantly undervalued the security firm. RIM now faces the prospect of increasing its Certicom bid or looking elsewhere to boost its security portfolio, something which could prove prohibitively expensive and difficult to achieve. Certicom competitors include big names such as EMC's ( EMC) RSA division, Entrust ( ENTU) and VeriSign ( VRSN).
The stakes are high for RIM. Strong smartphone sales helped boost the company's recent third-quarter earnings and the Waterloo, Ontario-based firm is locked in an arms race with its rivals Apple ( AAPL), Nokia ( NOK) and Palm ( PALM). Certicom is also openly canvassing other suitors, which could increase the pressure on RIM. Last month, for example, Certicom granted a number of un-named parties access to its 'data room' in an attempt to drive up its valuation. "The information provided in the data room is intended to facilitate offers reflecting the fair value of Certicom from interested parties," it said, in a statement. Potential bidders for Certicom, according to The Wall Street Journal, could include IBM, Qualcomm ( QCOM), Microsoft ( MSFT), EMC and Sony ( SNE), which is embroiled in a patent dispute with the security specialist. Despite the derailment of its Certicom takeover, RIM shares advanced with the broader tech market Wednesday. The smartphone manufacturer's stock closed up $2.98, or 6%, to reach $52.91 as the Nasdaq climbed 4.6%.