Will Sprint and RIM be acquired next?

Motorola Defy 2 Pictures, Images and Photos
Yesterday’s news about Google buying Motorola Mobility for $12.5 billion was surprising to many people. Most people discussed the 17,000 patents that come with Motorola as the primary reason for Google making that move. They also point to potential losers like Samsung and others which will now have to wonder if their operating system supplier just became their competitor. What I want to focus on instead is the rest of the telecommunications sector.

RIM’s stock finished the day up about 10% and Sprint jumped over 8% on the day. This is many times higher than the markets climbed on that day. There was only one reason why this occurred. Investors saw Sprint and RIM as the potential companies that are next in line to be acquired by someone. This happens often right after there is a big merger or acquisition in a sector. Since Google paid a big premium to Motorola Mobility shareholders, RIM and Sprint shareholders are hoping for a similar premium for their respective companies as well.

I expect that in the next few days we will hear rumours of various companies considering buying Sprint and RIM. Many of these rumours will be either false or not serious. However, big mergers often lead to additional mergers within the industry so the buzz around Sprint and RIM are not completely for nothing.

For RIM, an acquisition can be very good, depending on who buys it. Apple is basically eating their lunch and it doesn’t seem that they have an answer for it. If the right company acquires them it could breathe new life in them and maybe turn their fortunes around.

For Sprint, a merger can mean being able to better compete with AT&T since they recently acquired T-Mobile.

The next week or so will be fun to watch all the possible candidates kicking the RIM and Sprint tires to see if they want to buy them up and continue this new merger season.