Today, the once-mighty smartphone maker announced it has signed a letter of intent to be acquired by a consortium led by Fairfax Financial Holdings in a deal worth approximately $4.7 billion. Fairfax currently owns about 10% of BlackBerry shares that it says it will contribute as part of its proosed deal.
BlackBerry will review the deal over the next six weeks while a special commitee will also entertain other offers which may supercede the Fairfax offer. If no better offers surface, the Fairfax offer is expected to become definitive on November 4, 2013.
Barbara Stymiest, Chair of BlackBerry’s Board of Directors, said: “The Special Committee is seeking the best available outcome for the Company's 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.”
BlackBerry reported a staggering near $1 billion loss last week ahead of its second quarter earnings report and also said it planned to slash its workforce by 40% or about 4,500 jobs. The handset maker also said it planed to refocus on its core enterprise customer base, a direction that seems in sync with the direction Fairfax would like to take the company.
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," said Prem Watsa, Chairman and CEO of Fairfax, "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.”
Is the good news for BlackBerry customers?
Analyst Jack Gold said the acquition by Fairfax is "probably the best possible outcome of several unattractive options for BlackBerry.
Gold says that by going private and potentially bringing back the founder of the company, Mike Lazaridis (as has been rumored) BlackBerry could buy them some time to put its house in order.
"They would be a much smaller player, but being private would mean that Wall Street is not continuously breathing down their neck," Gold said in an email.
"It would provide them with some financial stability so its enterprise customers would not feel compelled to replace them for fear of going out of business (even though the issue of decreasing sales and moving to other platforms is driving that direction with some significant energy). And it could provide them with cover to rearchitect the company even more than they are now."
(Gold will be a featured speaker at the upcoming TabletBiz conference & expo coming to New York on November 13. Don't miss his presentation "The 7 key steps to an effective tablet deployment.")