BlackBerry to be consumed for a slim $4.7bn

The Canadian mobile phone company has agreed to a buyout offer by majority shareholder Fairfax for $9 per share.

by Gabriella Griffith
Last Updated: 30 Oct 2013
It must be a bittersweet time at BlackBerry, after the Canadian mobile giant agrees to be bought by its largest shareholder for $4.7bn, a fraction of its former value.
 
The offer from, private equity firm Fairfax Financial, is a lifeline for the mobile company, whose fortunes have wavered in the past few years. The deal gives a price of $9 per share, representative of BlackBerry current share price of $8.82 but a far cry from its peak price of $147.55 from back in June 2008.

Since last week, the share price has been on a roller-coaster ride, dropping 17% on Friday from $10.27 to $8.27, following the 40% jobs cut announcement, before flying back up to $8.98 yesterday following Fairfax's offer.
 
Fairfax, run by billionaire investor Prem Watsa, already owns 10% of BlackBerry and became the favourite to buy the company when Watsa stepped down from its board in August shortly after the company announced it would seek a buyer.
 
Watsa is known as Canada’s answer to Warren Buffett, partly because of his ability to take a long view on investments, often investing in ‘down-and-out’ stocks. Well, no change to his modus operandi here then.
 
‘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 said yesterday.
 
The deal hasn’t been shaken on just yet, Fairfax is to carry out due diligence over the next six weeks, during which time BlackBerry can look into alternative offers (but would have to pay Fairfax a sizable termination fee of between $157m and $261m if it went elsewhere).
 
Trading has been stopped on BlackBerry’s shares in New York, as the firm prepares to go private.
 
It’s been a tremulous few days for BlackBerry, the launch of its Blackberry Messenger app was marred with trouble at the weekend and it also emerged its executives were delivered a Bombardier private jet in July, the same quarter the company posted losses of almost $1bn and announced it would slash 40% of its workforce. The company has now announced the jet will be sold, making it the first thing out of the door - closely followed by some 4,500 jobs.
 
Whether Watsa can return Blackberry to its former glory remains to be seen. Perhaps he should go for a beer with Michael Dell (who has taken his eponymous computer company private in order to save it) to discuss rescue strategies?

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