BlackBerry Ltd (NYSE: BB) unloaded tech startup Cylance for USD$160 million onto cybersecurity company, Arctic Wolf, which is a vastly reduced price from the USD$1.4 pricetag Blackberry paid to buy it in 2018.
The terms of the deal released on Monday have the deal closing in fiscal Q4 in an split cash and shares deal. BlackBerry will get USD$80 million at closing and the rest of the tranche a year later with the rest coming in shares a year later.
BlackBerry pitched the Cylance acquisition as a key part of its pivot toward enterprise services nearly eight years ago. Cylance integrated its technology with BlackBerry’s existing platforms but largely continued to operate as a standalone business unit.
John Giammatteo, BlackBerry CEO, was quick to proclaim this transaction as a win for shareholders.
“Our customers will realize the benefits of continuity of service and the expertise that a global cybersecurity leader like Arctic Wolf provides. Arctic Wolf benefits by adding Cylance’s endpoint security solutions to its native platform.” Giammatteo said.
“Finally, as Arctic Wolf leverages its scale to build upon and grow the Cylance business, BlackBerry will benefit as a reseller of the portfolio to our large government customers and as a shareholder of the company.”
Cylance was founded in 2015 by former McAfee and Intel duo Stuart McClure and Ryan Permeh. It struggled to maintain a foothold in the increasingly crowded cybersecurity sector. The company’s AI-powered cyberthreat-analyzing software gradually lost ground to rivals.
According to IDC, Cylance captured just 1.3 per cent of the market for endpoint security in 2022. Endpoint security refers to protection for devices like desktops, laptops, and mobile devices.
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Investors responded positively to the deal
Giammatteo blamed Cylance’s failure partly on the market’s shift to threat detection and response products, which Cylance did not offer.
“Cylance [would require] significant investment to drive growth,” he said on a recent BlackBerry earnings call.
The sale is seen as a positive step by investors. As a result, BlackBerry shares on the Toronto Stock Exchange rose by nearly 15 per cent on the day of the announcement. This divestiture allows BlackBerry to remove a substantial weight of losses and cash usage from its balance sheet. Those funds can then be reinvested in its thriving QNX embedded systems software for automotive applications. Also, it can reinvest in its secure communications platforms like BlackBerry UEM, AtHoc, and Secusmart.
Arctic Wolf will integrate Cylance’s endpoint security solutions into its platform, enhancing its offerings in managed security services. This acquisition is expected to bolster Arctic Wolf’s position as a leader in AI-powered security operations, providing customers with comprehensive security from endpoint to edge.
Cylance also became a major drain on BlackBerry’s broader cybersecurity division. It posted a record USD$51 million loss for the fiscal year ending February 28, 2025. Earlier this year, BlackBerry CFO Tim Foote said the company would redirect spending from Cylance and other costly areas to grow its more profitable units, like its secure communications business.
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joseph@mugglehead.com
