In its biggest deal yet, BlackBerry Ltd. is buying a cybersecurity company that boasts artificial-intelligence technology capable of predicting digital attacks that customers may not see coming.
Waterloo, Ont.-based BlackBerry announced Friday that it had agreed to buy Irvine, Calif.’s Cylance Inc. for US$1.4 billion in cash, in addition to taking on responsibility for unvested employee incentive awards.
Industry watchers had been expecting BlackBerry, the former smartphone giant that has shifted away from hardware and toward software, to make some kind of acquisition after the company won a US$940-million arbitration award last year in a fight over royalties with chipmaker Qualcomm Inc.
“This is the largest acquisition in BlackBerry’s history,” said John Chen, executive chairman and CEO of the company, during a conference call. The deal is expected to close before the end of the company’s current fiscal year in February 2019, pending regulatory approvals and other closing conditions.
BlackBerry noted the deal would particularly complement its QNX unit, which makes software for cars, and its UEM unit, which helps secure various devices, such as smartphones or laptops.
A presentation on the deal said that Cylance’s AI-backed products both predict and protect “against known and unknown threats.”
The private company and its approximately 900 employees, according to BlackBerry, can typically identify and analyze threats 25 months before they emerge. Cylance says it does its work by applying AI, algorithmic science and machine learning to cybersecurity.
“We prove every day that you can actually identify attacks long before they ever start,” said Stuart McClure, chairman and chief executive at Cylance. “What we call the unknown-unknowns, and we truly prevent them.”
Under the terms of the deal, Cylance would continue to function as an independent business unit, one that recently offered to provide antivirus software, free of charge, to all of the 2018 political campaigns in the U.S.
In an August press release, McClure said that “it is clear that malicious actors are ramping up their activity in advance of the midterms, and we know malevolent hackers will exploit any vulnerability at any level to undermine a candidate’s run for office.
“We want to do our part to protect the democratic process from interference however we can, wherever we can.”
There are no doubts in my mind that we are acquiring cutting-edge technology.
This month, Cylance also released a research report that it said “explores the identification and tracking of a new — and likely state-sponsored — threat actor.” That actor, the company added, had conducted a year-long espionage campaign aimed at Pakistan’s air force.
“Cylance calls the campaign Operation Shaheen and the organization The White Company — in acknowledgement of the many elaborate measures the organization takes to whitewash all signs of its activity and evade attribution,” the press release added.
Prior to that, in 2014, Cylance published a report alleging that there had been “coordinated attacks by hackers based in Iran on more than 50 targets in 16 countries around the globe,” a release said.
BlackBerry said the acquisition would bring in approximately 100 additional patents and patent applications in cybersecurity and machine learning.
Chen said that Cylance’s customer base would also complement that of his own company, which he noted includes clients in the financial service and government sectors.
“There are no doubts in my mind that we are acquiring cutting-edge technology,” he added.
Shares of BlackBerry rose following news of the deal, and closed up 1.46 per cent on Friday in Toronto, at $11.82.
