BlackBerry Agrees to Sell to Fairfax for $4.9bn

BlackBerry has bowed to the inevitable and agreed to be bought by a consortium led by Canadian insurance firm Fairfax Financial – the company’s largest shareholder, with a stake of around 10 per cent – for $4.7bn (£2.9bn). If it goes through, the deal would see BlackBerry shareholders receive $9 per share in cash. 

The consortium behind the deal has been given six weeks to conduct due diligence. BlackBerry, meanwhile, has been given licence to ‘go-shop’ (aka secure a better deal) during the due diligence period, subject to payment of a termination fee in the event of a better, alternative offer being accepted.

Barbara Stymiest, chair of BlackBerry’s board of directors, said: “The Special Committee is seeking the best available outcome for the companys constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.” There is no official comment, however, from BlackBerry CEO, Thorsten Heins.

Prem Watsa, chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. 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.”

Regular readers may recall that Watsa resigned from the BlackBerry board ahead of the initial talks between the companies six weeks ago. 

We’ll have more on the deal in the morning. In the meantime, Jan Dawson, chief telecoms analyst at Ovum, was sceptical about the deal. He told us: 

“Taking BlackBerry private doesnt solve the fundamental problems at the company. First, the companys 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.

“BlackBerrys supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices. Its likely that BlackBerry will be out of the device business entirely by the middle of next year. The next challenge is that BlackBerrys other businesses are all to a greater or lesser extent dependent on its devices business. BlackBerry Messengers installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend.

“Its 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 BlackBerrys use of its QNX operating system for BlackBerry devices, youre left with a business thats worth less than $100M. About the only part of BlackBerry that looks to be worth a significant amount at this point is its patent portfolio, and that certainly wouldnt 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 BlackBerrys key problem for the last couple of years has been the lack of such a long-term strategy. It simply hasnt articulated a way to rebuild its business as its device sales drop precipitously. Unless Fairfax plans to radically change or accelerate BlackBerrys strategy, its unlikely to be able to turn the company around. And that means were likely seeing the beginning of the end for one of the most iconic brands in mobile technology.”


The Rise and Fall of BlackBerry. Read