BlackBerry Receives Tentative $4.7B Acquisition Offer from Fairfax Financial Group

BlackBerry Receives Tentative $4.7B Acquisition Offer from Fairfax Financial Group

BlackBerry announced today that it has signed a letter of intent with a group led by Fairfax Financial, who is a current shareholder with a 10% stake in the company. Initial reports say shareholders would receive $9 per share, in a takeover worth $4.7 billion.



It’s believed that if a deal is done, it will be signed by November 4. However, additional offers could be solicited in the meantime. Whatever the result, it’s perhaps welcome news for the company, given that it has been shopping itself around. Potential suitors had indicated that if they acquired BlackBerry, it would only be looking for its operating system and keyboard patents.

The group would take the Canadian company private. The smartphone makers co-founder, Mike Lazaridis sought to do just that this weekend. Fairfax’s Chairman and CEO Prem Watsa said in a statement:

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.

Prior to the news of the tentative deal, Blackberry stock was trading at $8.23. After trading resumed, the stock closed at $8.82.

The deal follows news from BlackBerry last week that the company would be reducing its workforce by 4,500 after a severely disappointing Q2 2014 earnings result that saw the company bring in 50% less revenue than it expected to.

Blackberry also attempted to release its BlackBerry Messenger app for iOS and Android over the weekend, but quickly pulled back, citing demand “issues” with its servers.

What does the acquisition, and subsequent taking of the company private mean for BlackBerry?

Chris Umiastowski of CrackBerry had this to say about how it might affect customers:

This transaction shouldn’t really affect customers since the company will still exist and still sell hardware, software and services. BBM will still go cross platform, and the company will still be fighting to win back market share.  Customers (or possible customers) may read less negative headlines, which could lead more people to buy the products (hey, I can hope …)

As far as how it may affect employees, he said the deal is a good thing for those who work at BlackBerry, as “Going private will allow them to stop worrying about all of the media trash talk. It should help morale. That said, it’s not a golden ticket, and it doesn’t mean layoffs will end. This is still a business and Fairfax (and the other consortium members) are the new owners of the business if this deal happens.”

This should be interesting to watch as BlackBerry attempts to claw its way back from the depths of near obsolescence.