Consortium led by Fairfax Financial Holdings to acquire BlackBerryBy Hanleigh Daniels 25 September 2013 | Categories: news
Embattled smartphone maker BlackBerry has revealed that is has signed a letter of intent (LOI) agreement, in which a consortium led by Fairfax Financial Holdings has offered to acquire the company.
This letter includes an offer that will see BlackBerry’s shareholders receiving $9 in cash for each share they hold in the company, for a total transaction valued at around $4.7 billion. In addition, the consortium would acquire all of the outstanding shares of BlackBerry not held by Fairfax, which already owns approximately 10% of BlackBerry’s common shares.
BlackBerry’s Board of Directors (BoD), acting on the recommendation of the firm’s special committee has approved the terms of the LOI that will result in the consortium turning BlackBerry into a privately held company. This deal is subject to a number of conditions that includes due diligence, negotiation and execution of a definitive agreement, as well as customary regulatory approvals.
Acquisition deal not set in stone
Barbara Stymiest, chair of BlackBerry’s BoD said: “The Special Committee is seeking the best available outcome for the company’s constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”
This go-shop process Stymiest is referring to is the six week period of due diligence that is expected to conclude on 4 November. During this period, the two parties work towards concluding a definitive transaction agreement. BlackBerry is allowed to actively seek, evaluate and potentially enter into negotiations with other prospective buyers that offer alternative proposals.
To the point
Things have been not been well in BlackBerry land, with the company recently revealing a humongous operating loss of between $950 million and $995 million for its fiscal Q2 2014.
This prompted the Waterloo-based firm to adopt a few additional restructuring plans including slashing its workforce by 4500 employees, as well as the reduction of its planned smartphone portfolio for 2013 from six BlackBerry 10 running smartphones to four devices (BlackBerry Z10, BlackBerry Q10, BlackBerry Q5, and BlackBerry Z30). Will a new, privately held BlackBerry have more luck in the increasingly competitive smartphone industry that is dominated by Android devices and the iPhone?
Prem Watsa, chairman and CEO of Fairfax seems sure, stating: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”
In related news, BlackBerry’s popular BBM (BlackBerry Messenger) service will be holding onto its exclusivity tag a little longer, after the company recently hit the pause button on its efforts to bring the service to Google Play and Apple’s App Store.
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