BlackBerry to buy cybersecurity firm Cylance for $1.4 bln: Reuters

BlackBerry Ltd raised its bets on artificial intelligence and cybersecurity on Friday with the US$1.4 billion purchase of U.S. machine-learning specialist Cylance.

The Canadian technology company, which dominated the smartphone market a decade ago, has shifted to selling software to manage mobile devices, as well as emerging areas like autonomous cars.

Privately owned Cylance uses machine learning to preempt security breaches before they occur. Its applications seek to block malware or infiltration attempts rather than react after a breach.

Cylance, which has over 3,500 active enterprise customers, had been considering filing for a stock market floatation, according to a report in Business Insider.

“Cylance’s leadership in artificial intelligence and cybersecurity will immediately complement our entire portfolio,” BlackBerry CEO John Chen said in a statement.

The Irvine, California-based company’s Chief Executive Stuart McClure, in turn, said it would be able to leverage Blackberry’s strength in mobile communications and security to adapt its AI technology.

Besides the US$1.4 billion that BlackBerry will pay, the deal also includes the assumption of Cylance’s unvested employee incentives, BlackBerry said.

Cylance will continue to operate as a separate business unit after the deal closes, BlackBerry said. The transaction is expected to be completed by February 2019.

U.S.-listed shares of Blackberry were marginally up in light pre-market trading.

Update: Founded in 2012, Cylance secured more than US$280 million from venture capital funds, according to Refinitiv data. That includes the US$120 million raised earlier this year in a round led by Blackstone Tactical Opportunities.

The company’s other investors include DFJ, Insight Venture Partners and Khosla Ventures.

(Reporting by Bhargav Acharya and Debroop Roy in Bengaluru; Editing by Sunil Nair and James Emmanuel)

(This story has been edited by Kirk Falconer, editor of PE HUB Canada)