Blackberry has signed a letter of intent with Fairfax Financial for a $4.7 billion buyout. The deal would pay each shareholder $9/share in cash, and could end up bringing Blackberry under the auspice of privatization.
Fairfax has six weeks for due diligence and negotiations. In that six weeks, Blackberry is allowed to “go-shop”, which means they can continue to field and solicit offers from other companies.
Should they find an offer attractive enough to make them forgo their offer with Fairfax, a termination fee of $0.30/share applies — about $156 million.
Fairfax is currently seeking financial backing from Bank of America, Merrill Lynch, and BMO Capital Markets to complete the deal. As stated in the announcement, “There can be no assurance that due diligence will be satisfactory, that financing will be obtained, that a definitive agreement will be entered into or that the transaction will be consummated.”
BlackBerry accounted for 3% of mobile device sales worldwide in 2011, making its manufacturer the sixth most popular device maker. BlackBerry, iPhone, Android, and Windows Phone are considered the four major smartphone brands.
In Aug 12, 2013, the company announced that it would be up for sale and the company announced on Sept. 20, 2013 it will eliminate 4500 position, 40% of its operating staff, and reducing its product line from six to four models. A new operating system, BlackBerry 10, was released for two new BlackBerry models (Z10 and Q10) on January 30, 2013 but sales of the device have been poor.
Most recently, BlackBerry expects a near-$1 billion quarterly loss. The Canadian company reportedly sold only 3.7 million smartphones in the last quarter. In comparison, Apple sold more than 9 million iPhones just over the last 3 days.