BlackBerry Ltd (TSX:BB)(NASDAQ:BBRY) announced on Wednesday it has been awarded $814.9 million U.S. in a binding interim arbitration agreement as a result of a dispute with Qualcomm Inc. (NASDAQ:QCOM). The sum equals approximately 20% of BlackBerry’s current market cap.
Shares soared on the news, rising as much as 20% in pre-market trading.
In 2016, the two companies agreed to use arbitration to solve a disagreement regarding a previous royalty arrangement. The two companies were disputing whether Qualcomm’s agreement to cap certain royalties applied to payments made by BlackBerry under a license agreement between the two parties.
BlackBerry had previously disclosed the arbitration case in its financial filings, but investors were skeptical the potential reward would be nearly this lucrative.
The two companies will continue to work together even after this ruling. BlackBerry CEO John Chen said "BlackBerry and Qualcomm have a long-standing relationship and continue to be valued technology partners." Qualcomm told investors it didn’t agree with the ruling, but it will accept the arbitrator’s decision and continue to work with BlackBerry in the future.
Analysts immediately speculated BlackBerry’s new cash will be put towards further acquisitions. The company spent much of the last few years moving away from hardware into software, which included several acquisitions of niche software providers. It also plans a big push into the self-driving car space.
BlackBerry shares were up $1.63 each to $11.90 during early Wednesday afternoon trading on the Toronto Stock Exchange, an increase of 15.9%. In the last month alone, BlackBerry stock is up nearly 30%.
