BlackBerry has announced that it has signed a letter of intent to pay shareholders $9 a share in cash to take the company private. The letter of intent for the deal, worth an estimated $4.7 billion, was from a group led by Fairfax Financial Holdings, a Canadian insurance and investment company. Fairfax did not identify the other investors in its consortium. The deal is contingent on a number of conditions.
Fairfax already owns about 10 percent of BlackBerry. In March, V. Prem Watsa, Fairfax’s chairman and chief executive, told shareholders that the company paid an average price of $17 for its BlackBerry shares. However, even with the offer to take BlackBerry private, there is still a lot of uncertainty surrounding the ailing smartphone maker.
The company recently announced that it anticipated reporting a quarterly loss of around $1 billion. Instead of reviving the company, the release of the BlackBerry 10 line of phones was largely considered a failure. The company also made an announcement about its intentions to lay off about 40 percent of its work force, around 4,500 people.
BlackBerry’s board seized on the offer as a way to halt the fall in the company’s stock and create an opportunity to kick off an auction. The board quickly signed a letter of intent and the particulars of the announcement of the deal were thrown together in a matter of hours. However, given the company’s uncertain prospects, it is unclear if any potential rival suitors will appear to make a bid.
Several analysts said they do not know how the Fairfax group plans to halt the rapid decline of Blackberry, much less stabilize the company or return it to profitability. Jan Dawson, a telecommunications analyst with Ovum, said, “Last week was essentially an announcement that they are leaving the handset business. But pick any market they’re trying to go into and there are strong, entrenched competitors.”
