BlackBerry has signed a letter of intent offer from consortium led by Fairfax Holdings Ltd., after the group made an offer to buy the Canadian smartphone maker for $9 a share, or $4.7 billion.
Trading on BlackBerry shares was halted Monday afternoon, at $8.23 per share. Fairfax currently owns 9.9 per cent stake in the company. The deal would make BlackBerry a private company, as opposed to the TSX and NASDAQ-trading public company it is now.
from Deal/Book (NY Times), by David Gelles and Ian Austin:
“While being privately held would allow BlackBerry to restructure without worrying about bad news affecting its share price, several analysts have questioned how it can remain in the phone business without access to open capital markets. Its competitors like Apple and Google are among the most profitable and largest corporations in the world.”
(*In line with Deal/Book’s reporting, the news of BlackBerry pending sale came on the same day Apple announced it had sold 9,000,000 5C and 5S iPhones, sending that company’s stock up five per cent.)
In a news release, BlackBerry says the letter of intent permits Fairfax six weeks to “conduct due diligence” and it allows BlackBerry to “go-shop” during that period, with a termination fee applied if the company accepts an alternative offer.
The diligence period ends on November 4.
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees,” said Prem Watsa, chairman and CEO of Fairfax.
“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.”
BlackBerry was founded in 1984 in Waterloo, Ontario, and was introduced to its market(s) in 1999.
Just last week, the company announced it was cutting 4,500 jobs across all its properties, and first quarter losses totalled nearly $1 billion.