Posted by Tsepz_GP
BlackBerry Ltd. (BB) got a tentative $4.7 billion buyout offer from a group led by its biggest shareholder, forging a path to go private after a new line of smartphones failed to catch on.
The group led by Fairfax Financial Holdings Ltd. (FFH) would offer $9 a share, according to a statement today -- a 3.1 percent premium over BlackBerry’s closing price last week. The consortium is still seeking financing for the offer, which will be subject to due diligence and further negotiation.
The Waterloo, Ontario-based company said last week that it’s cutting 4,500 jobs and taking a writedown of as much as $960 million for unsold inventory of its Z10 phone -- a touch-screen device unveiled in January as its answer to the iPhone. BlackBerry said the Fairfax-led group will be able to scrutinize its books in the six weeks through Nov. 4, during which the smartphone maker can seek other takeover bids.
Chief Executive Officer Thorsten Heins had bet the Z10 would become BlackBerry’s new flagship, restoring cachet and prosperity to the one-time smartphone leader. Instead, the model fizzled with consumers and contributed to the company’s weakest quarterly sales in six years.
“This transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.” Fairfax Chief Executive Officer Prem Watsa said in the statement. “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.”
Watsa stepped down from BlackBerry’s board last month to avoid a conflict of interest as the company sought a buyer. Fairfax had a 9.9 percent stake in BlackBerry as of June 30, according to data compiled by Bloomberg.
BlackBerry rose 3 percent to $8.99 at 2:03 p.m. in New York.
BlackBerry, credited with inventing the first smartphones more than a decade ago, once sold products that were so popular and addictive they were known as CrackBerrys. In recent years, the company failed to keep pace with Apple Inc. (AAPL) and Samsung Electronics Co. (005930), which offered better Web browsing and a wider range of applications. BlackBerry’s share of the global smartphone market shrank to 2.9 percent in the second quarter from 4.9 percent a year earlier, according to IDC. It has fallen to fourth place behind Google Inc.’s Android, Apple’s iOS and Microsoft Corp.’s Windows Phone platform.
The group led by Toronto-based Fairfax is seeking financing from Bank of America Corp.’s Merrill Lynch unit and from BMO Capital Markets, according to the statement. BlackBerry didn’t name the other members of the takeover consortium.
BlackBerry will owe a breakup fee of 30 cents a share, or about $157 million, if it chooses an alternate transaction, the company said. If the smartphone maker and Fairfax sign a definitive agreement, the fee will rise to 50 cents a share.
JPMorgan Chase & Co. and Perella Weinberg are advising a special committee of BlackBerry’s board on the transaction. Skadden Arps Slate Meagher & Flom LLP and Torys LLP are legal advisers to the committee.
BDT & Co., Merrill Lynch and BMO are Fairfax’s financial advisers, while Shearman & Sterling LLP and McCarthy Tetrault LLP are its legal advisers.
Posted by hihihans
With news like this I always wonder, is it good or is it bad news.
Posted by Dups!
It is 50/50. It could work for them but the question is is there hope?
I really would love for them to bounce back, just for my QWERTY phone and the awsome QNX/BB10 platform. only time will tell.
Now, on my next prediction. HTC is another company on death's target. I remember some time last year when I said that they won't make it and am still positive that they won't.