BlackBerry offloads Cylance for a fraction of what it paid in 2019

BlackBerry’s underperforming cybersecurity arm, Cylance, has been acquired by Arctic Wolf for $160 million, a fraction of the $1.4 billion BlackBerry paid for it in 2019, the company announced Monday.

Cylance, which offers AI-based endpoint protection, has been a drag on Canada-based BlackBerry’s business. The deal with Arctic Wolf — a Minnesota-based AI-powered security company — gives BlackBerry $80 million when it closes at the end of its fourth quarter and the balance at the end of next year. The company also will get about 5.5 million common shares in Arctic Wolf.

Once a dominant player in the smartphone market, BlackBerry has more recently focused on software for devices and autonomous vehicles. 

In October, BlackBerry told investors that it expected Cylance to lose $51 million this year.

BlackBerry signaled to investors that a sale was in the offing and said it would channel spending to its profitable Internet of Things (IoT) business and away from Cylance. The company’s share price rose by more than 4% after those comments. The company’s shares were up 15% Monday on the news of the acquisition.

In announcing the deal Monday, a BlackBerry press release emphasized that Cylance’s pioneering endpoint protection business is trusted by organizations worldwide. Arctic Wolf’s acquisition of Cylance will usher in a “new era of simplicity, flexibility and outcomes to the endpoint security market, delivering the security operations results customers have been asking for,” a BlackBerry press release said.

BlackBerry CEO John Giammatteo called the deal a win for all involved.

“Our customers will realize the benefits of continuity of service and the expertise that a global cybersecurity leader like Arctic Wolf provides,” Giammatteo said in a statement.

Giammatteo added that Arctic Wolf will invest in growing Cylance.

Arctic Wolf customers will gain from the integration of Cylance’s endpoint security capabilities into its existing products, CEO Nick Schneider said in a statement.

“Security has an operations and effectiveness problem and endpoint solutions alone have failed to live up to the outcomes they have promised for years,” Schneider said. 

The steeply discounted Cylance sale price is a comedown after the heady $1.4 billion, all cash 2019 purchase by BlackBerry, its biggest ever merger and acquisition. 

Cylance functioned as a standalone business unit for BlackBerry, but its tech was built into the company’s existing platforms.