BlackBerry to go private in $4.7bn deal with Fairfax Financial Holdings

TROUBLED smartphone maker BlackBerry is set to go private, as it has reached a preliminary agreement to sell up to Fairfax Financial Holdings.

The deal, announced on Monday, values the Canadian smartphone firm at $4.7bn, with shareholders to receive $9 per share in cash, Financial Director’s sister title V3 reports.

There will be a six-week period for the group, led by financial holding company Fairfax, to carry out due diligence. Fairfax, which already owns around 10 percent of BlackBerry stock, will contribute its shares as part of the deal. The group is seeking financing from BofA Merrill Lynch and BMO Capital Markets.

The BlackBerry board has approved the terms under which the consortium would acquire BlackBerry and take the company private, subject to a number of conditions.

BlackBerry put itself up for sale in August, after a series of misfortunes and plummeting share values and revenue. The move to take the firm private would allow it to try and restructure and find a place in a market now dominated by bring your own device consumer handsets. Fairfax indicated that BlackBerry’s future is firmly in the enterprise segment, according to the group’s plans.

Prem Watsa, chairman and chief executive 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.”

The diligence process will end on 4 November. In the interim, BlackBerry is able to actively solicit, evaluate and enter into negotiations with alternative proposals.

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.”

The move would see BlackBerry follow Dell in removing itself from the stock market to enable a change in direction. Fairfax will no doubt be hoping this deal will prove smoother than the Dell buyout, which finally ended in success for Michael Dell on 12 September, after 14 months of wrangling.