BlackBerry will sell Cylance, its cybersecurity subsidiary, to Arctic Wolf for US$160 million.
Cylance’s products include antivirus and security software, powered by artificial intelligence. BlackBerry acquired the company for US$1.4 billion in 2018.
“Arctic Wolf benefits by adding Cylance’s endpoint security solutions to its native platform,” said BlackBerry CEO John Giamatteo. “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.”
Arctic Wolf will purchase Cylance for US$160 million in cash, as well as 5.5 million of its common shares. The acquisition is expected to close in BlackBerry’s fourth quarter.
Cylance held just 1.3% of the endpoint security market in 2022, according to IDC. It has posted a US$51 million loss so far this fiscal year.
Arctic Wolf, a cybersecurity business, offers constant real-time monitoring built on Extended Detection and Response. It was valued at US$4.3 billion in 2021 after a $150 million funding round, and raised $401 million in convertible notes in 2022.
“By incorporating Cylance’s endpoint security capabilities into our open-XDR Aurora platform, we will be addressing a rampant need for a truly unified, effective security operations that delivers better outcomes for customers,” said Arctic Wolf CEO Nick Schneider.
The company began hiring advisors for a potential IPO in 2021, but Schneider said earlier this year that Arctic Wolf would wait for favourable interest rates before an IPO launch.
BlackBerry’s (NYSE: BB) share price surged to close at US$3.09 after announcing Cylance’s acquisition, up from the previous day’s $2.69. Its market cap is US$1.83 billion.
BlackBerry is expected to release its third-quarter earnings report on December 19, having bested expectations in the four previous quarters by an average of 131.25%.