BlackBerry to Buy WatchDox -- Update

By Dana Mattioli And Ben Dummett 

BlackBerry Ltd. confirmed Tuesday it would buy closely held WatchDox Ltd., its latest niche acquisition aimed at boosting sales of mobile security offerings to government and corporate customers.

The deal also gives the Canadian smartphone maker a platform to expand its research and development operations into Israel, a center for the development of security technologies.

Waterloo, Ontario-based BlackBerry didn't disclose financial terms, but The Wall Street Journal reported earlier that it is paying about $70 million for WatchDox.

Startup WatchDox is based in Palo Alto, Calif., and develops software that allows companies to control how employees edit, copy, print or forward files. Its software can also revoke access and delete files remotely across desktop and mobile devices, including BlackBerrys, Apple Inc.'s iPhones and smartphones powered by Google Inc.'s Android operating system.

The acquisition follows BlackBerry's $32.5 million purchase in September of Movirtu Ltd., which develops software that helps companies reduce their employee mobile-device costs, and its $82 million acquisition in December of Secusmart GmbH, a maker of mobile encryption and anti-eavesdropping technologies.

WatchDox and Secusmart together allow BlackBerry to offer enterprise customers "secure voice, secure data, secure messaging and secure documents," across platforms, Jim Mackey, BlackBerry's executive vice president of corporate development, said in an interview.

BlackBerry is betting on the sales of mobile security and productivity software, and smartphones aimed at professionals, to reignite growth after a failed attempt in 2013 to compete in the consumer market against Apple, Samsung Electronics Co. and other device makers.

Still, its growth strategy remains unproven amid uncertainty BlackBerry can win back its traditional enterprise customers after many abandoned its older technology for mobile security offerings from Citrix Systems Inc., MobileIron Inc. and other rivals. Last month, BlackBerry reported a 32% decline in quarterly revenue.

Founded six and half years ago, WatchDox counts private-equity giant Blackstone Group L.P., Nike Inc., the well- known running shoe maker, and the Californian Department of State Hospitals among its customers. It won't say if it generates a profit.

The deal gives WatchDox access to BlackBerry's 160 carrier partners to help its boost sales of its file security technology.

"BlackBerry can really help us accelerate our reach into markets," Moti Rafalin, WatchDox's chief executive and founder, said in a telephone interview.

WatchDox also operates a research and development center in Petah Tikva, Israel, where slightly more than half of its 85 employees work. Israel is a well-known technology center for security and BlackBerry hopes the R&D center will allow it to take advantage of this opportunity.

The WatchDox acquisition "is the best way to get to that market and to get access to the talent," BlackBerry's Mr. Mackey said.

Write to Dana Mattioli at [e-mail] and Ben Dummett at [e-mail]

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