Fairfax Financial Holdings (no relation to the Australian media company) has made the offer, in the form of a Letter of Intent. It is already BlackBerry’s largest shareholder, with 10% of the company. Under the deal Fairfax would take BlackBerry private.
Reuters reports that Fairfax is seeking finance from Bank of America Merrill Lynch and BMO Capital markets to finance the deal, which offers US$9 a share for the struggling Canadian smartphone maker. BlackBerry shares jumped from $8.21 to $9.17 in heavy trading when the offer was announced, but quickly fell back below the offer price as the market realised that was probably the best deal around. The shares closed at $8.82 on NASDAQ.
The Fairfax offer is a floor price – higher bids can be made before the 4 November closing date, by which time Fairfax will have done its due diligence. BlackBerry formed a special committee in August to explore ways to return the most value to the company’s long-suffering shareholders.
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.”
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.”
Watsa is an Indian-born financier who has been called “the Canadian Warren Buffet” for his successful investments.