BlackBerry took a U-turn today: after two and a half months seeking a buyer, it has dropped this plan and decided instead to oust its CEO Thorsten Heins and some directors, and raise $1 billion of new funds, the Globe and Mail reports.
The struggling Canadian smartphone maker has received a letter of intent from investor FairFax Financial Holdings Ltd. to acquire the company for $4.7 billion, or $9 per share. The company’s largest shareholder has time until today to go through BlackBerry’s books and finalize the bid.
Investors have feared that FairFax hasn’t raised the money until today for the initial $4.7 billion bid, but now it all becomes obvious: there was no need to raise money because the two parties have agreed that FairFax and other institutional investors will invest another $1 billion in BlackBerry to help the company reclaim its success.
As a first step of the agreement signed between BlackBerry and FairFax, Thorstein Heins and David Kerr need to leave the company within two weeks. FairFax has agreed to acquire $250 million principal amount of Deventures, a transaction that will complete within two weeks.
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” said Barbara Stymiest, Chair of BlackBerry’s Board. “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs,” the company wrote in a press release.
Thorsten Heins will be replaced by John S. Chen, former CEO of Sybase Inc., who will be responsible for BlackBerry’s strategic direction, strategic relationships, and organizational goals.