Video: Fairfax financial puts an offer on the table for troubled smartphone maker BlackBerry. Mike Drolet reports.
Troubled Canadian smartphone-maker BlackBerry announced Monday it has struck a deal to sell itself to a consortium of investors led by Fairfax Financial for $4.7 billion.
Shares in the Waterloo, Ont.-based technology firm were halted Monday afternoon shortly before a press release went out disclosing the deal.
A group led by Toronto-based Fairfax — BlackBerry’s largest shareholder — will pay $9 a share for all oustanding stock Fairfax doesn’t already own.
The Toronto company owns about 10 per cent of the technology firm already.
The smartphone-maker said if the deal is successful, it will de-list from the stock exchange and operate as a private company — away from the daily scrutiny that being public brings.
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees,” Prem Watsa, chairman and chief executive of Fairfax, said.
“We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company,” Watsa said.
The offer comes days after BlackBerry announced it was culling more than a third of its workforce amid flagging sales of its new BlackBerry 10 devices, phones being banked on to turn around BlackBerry’s rapidly falling fortunes.
The company will book a charge of nearly $1 billion when it reports quarterly results later this week related to unsold inventory.
What exactly Fairfax can do to pull the company from its present tailspin or even simply arrest the decline is far from clear.
BlackBerry’s handset business still accounts for the lion’s share of revenue, but that side of the company is now quickly evaporating as wary customers flock from the handset lineup.
“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,” Jan Dawson, telecom analyst at market research firm Ovum, said.
It’s “likely” BlackBerry will be out of the device business entirely by mid-2014, he said.
Not surprisingly, the other areas of the business – its security management of wireless devices and BBM messaging platform, for example – remain heavily reliant on actual BlackBerry phones for their use and thus revenue, Dawson said.
Those services won’t likely be adopted easily by other vendors.
“BlackBerry Messenger’s installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend,” Dawson noted.
Fairfax’s bid has set a deadline of Nov. 4 to have a definitive agreement in place. The company will entertain alternative offers from other potential buyers up until that date.
“The go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal,” Barbara Stymiest, BlackBerry’s chair, said in a statement.
Interactive: Explore BlackBerry’s stock price since before the launch of Apple’s first iPhone in 2007. Use the slider below to change the chart’s time frame, and click for day-by-day details.