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Fairfax Offers $4.7B Deal to Buy BlackBerry, Take Company Private [u]

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The Globe and Mail reports Fairfax Financial Holdings has offered a $4.7 billion deal to buy BlackBerry and take the company private:

Fairfax Financial Holdings Ltd. has put together an equity consortium that is seeking to take BlackBerry Ltd. private for $9 (U.S.) a share, a deal valued at about $4.7-billion.

BlackBerry is giving the group six weeks to conduct due diligence, with a final agreement expected by Nov. 4. BlackBerry is able to look for alternative offers in the meantime, but the Fairfax group has a right to match them. Fairfax’s equity partners want to remain anonymous until the due diligence is completed.

Fairfax CEO Prem Watsa said in an interview “BlackBerry has fallen on hard times recently, but we have every confidence it will be successful again.” Watsa, a former BlackBerry board member who stepped down last month, says they want to ensure the company “remains in whole in Canada.” He also continued to echo a previous report which said BlackBerry would focus on the enterprise market instead and simplify its consumer offerings.

BlackBerry has issued a press release saying it has signed a letter of intent agreement with Fairfax Financial, so it looks like this deal could go through once due diligence has been completed. Shares of BlackBerry trading have halted in North America.

Last Friday BlackBerry announced it would cut 4,500 jobs and write down $960 million in hardware, most comprised of its overhyped BB10 smartphone line up which has failed to meet high expectations and sales.

…more to follow

Update: Jan Dawson, chief telecoms analyst at Ovum send the following email statement on this deal:

“Taking BlackBerry private doesn’t solve the fundamental problems at the company. First, the company’s device sales are cratering, and its announcement last week that it no longer intends to pursue the consumer market is essentially the death knell for this business. BlackBerry’s supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices. It’s likely that BlackBerry will be out of the device business entirely by the middle of next year. The next challenge is that BlackBerry’s other businesses are all to a greater or lesser extent dependent on its devices business. BlackBerry Messenger’s installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend. It’s mobile device management business is entirely based on its ability to manage BlackBerry devices, and its cross-platform management is much less well established than those of major competitors like MobileIron and Airwatch. If you strip out BlackBerry’s use of its QNX operating system for BlackBerry devices, you’re left with a business that’s worth less than $100 million. About the only part of BlackBerry that looks to be worth a significant amount at this point is its patent portfolio, and that certainly wouldn’t justify the purchase price on its own.

“Normally, companies are taken private in order to give a long-term strategy time to payoff without the hassles of short-term investor scrutiny. But BlackBerry’s key problem for the last couple of years has been the lack of such a long-term strategy. It simply hasn’t articulated a way to rebuild its business as its device sales drop precipitously. Unless Fairfax plans to radically change or accelerate BlackBerry’s strategy, it’s unlikely to be able to turn the company around. And that means we’re likely seeing the beginning of the end for one of the most iconic brands in mobile technology.”

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  • Sven L

    Like when Ford bought Volvo for $6.8B and dumped them for a staggering $5B LOSS only 2 years later? I wonder how this will work out for FFH…

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