ABOVE: The aftermath of the Blackberry sale. Jennifer Palisoc reports.
What would the break-up of BlackBerry look like? Experts have begun drawing up blueprints.
With Fairfax’s initial offer in place, analysts who cover the company say there’s a 50-50 shot that competing bids will emerge for all or parts of the company between now and a deadline of sorts of Nov. 4.
“Our view is this offer is the first but not the final one,” Todd Coupland, an analyst at Canadian Imperial Bank of Commerce said in a note Tuesday. A takeover of BlackBerry appears “inevitable” he said, “and that it should come at a higher price.”
A group led by Fairfax, a Toronto-based insurance and investment company, plans to pay $9 a share for BlackBerry, or $4.7 billion.
But analysts say the individual parts of the Waterloo, Ont. company are worth more than the offer when added together, something that could entice other bidders such as rival smartphone companies, private investors or even cellphone carriers to make offers.
According to CIBC, there are five main assets that form the entirety of BlackBerry’s value at this point. The first is the company’s trove of 9,000 patents related to all the mobile and communications technology it pioneered as a one-time market leader in smartphones.
A long list of rivals such as Google, Apple and Samsung, to name a few, could use BlackBerry’s portfolio to defend themselves from infringement litigation, or go on the offensive. The price tag: $2.1 billion.
BlackBerry’s campus in Waterloo and the rest of its global real estate holdings are estimated to be worth another $687 million.
A third but volatile source of value to potential buyers is the services business, which provides a secure, global network that manages communications and data for smartphones used by enterprise clients such as government agencies and corporations.
Based on best-case and worst-case assumptions about how the user base will be either kept intact or eroded over the next half decade, CIBC pegs the value at $3.8 billion on the high end or $1.8 billion on the low side.
Finally, BlackBerry’s hardware business – the unit responsible for actually making the phones, could fetch an offer of between $1.8 billion and $890 million, CIBC said.
There’s also a mountain of $2.6 billion in cash sitting in BlackBerry’s bank account.
Add it all up, and you have a business worth more than the current offer, according to CIBC, even accounting for the half a billion dollar charge BlackBerry will have to likely take as part of its latest restructuring efforts.
The table below, courtesy of CIBC World Markets, provides a bit more detail. The value is per share, meaning each of BlackBerry’s 524 million outstanding shares would have $4 in value related to the company’s patent portfolio, and so on.