Blackberry Going Private! Largest Shareholder Buys Smartphone Maker for $4.7 Billion

September 24, 2013  |  

Just three days after Blackberry’s announcement that it will cut 40 percent of its employees (4,500 people) due to a $1 billion quarterly loss, Fairfax Financial Holdings—Blackberry’s largest shareholder—has offered to buy the smartphone-maker for $4.7 billion or $9 a share.

Blackberry has been drowning in America’s infatuation with iPhones and Androids, watching its market share nosedive over the past few years. So that leaves one question: Why would anyone want to buy Blackberry? According to Bloomberg Newsweek, between short-term investments, cash, and accounts and notes receivable, Blackberry says it has about $5.2 billion sitting around. “Fairfax, for its part, seems to have run the numbers and decided that there is still some value to be squeezed out of the company,” the magazine reports. “This doesn’t seem illogical at first glance, [but] BlackBerry has an arsenal of patents, which have been valued between $2 billion and $5 billion. ”

Moreover, the company has managed to hang on to corporate customers, who still value the business uses of the devices and the QWERTY keyboard. That’s an area that the company has already said it will continue to focus on.

“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,” Prem Watsa, chief executive of Fairfax, said in a statement.

“It’s likely that BlackBerry will be out of the devices business entirely by the middle of next year,” said Jan Dawson, a chief telecoms analyst. Taking Blackberry private doesn’t solve its fundamental issues, she said, and “the company lacked a long-term strategy.”

The privatization of Blackberry, however, is not yet set in stone. The company has until Nov. 4 to find a better proposal than Fairfax before sealing the deal. “If BlackBerry does receive multiple offers, a bidding war could break out,” CNN Money reported. However, that is highly unlikely. On Monday, the company’s share was trading at $8.82—just under Fairfax’s sale price of $9, which suggests that Blackberry is not anticipating higher bids anytime soon, Forbes said.

As CNN Money concludes, “if the Fairfax deal goes through, it will likely be a big relief for BlackBerry — and a big challenge for Fairfax.”

Also via The New York Times

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