Last update: 05-Dec-2013 1:31 am
Thursday, December 05, 2013
Trinidad & Tobago Guardian Online
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BlackBerry sells for US$4.7 billion
TORONTO—BlackBerry has agreed to a US$4.7 billion sale to a group led by its largest shareholder, Fairfax Financial Holdings Ltd, after new smartphones failed to turn the company around.
BlackBerry Ltd said Monday that a letter of intent has been signed and that its shareholders will receive $9 in cash for each share. The deal comes just days after the Canadian company announced plans to lay off 40 percent of its global workforce. The BlackBerry, pioneered in 1999, was once the dominant smartphone for on-the-go business people and other consumers. It could be so addictive that it was nicknamed “the CrackBerry.” President Barack Obama couldn’t bear to part with his BlackBerry. Oprah Winfrey declared it one of her “favourite things.” But then came a new generation of competing smartphones, starting with Apple’s iPhone in 2007. The BlackBerry, that game-changing breakthrough in personal connectedness, looked ancient suddenly.
Although BlackBerry was once Canada’s most valuable company with a market value of US$83 billion in June 2008, the stock has plummeted from more than US$140 a share to less than US$9, giving it a market value of US$4.6 billion, just short of Fairfax’s offer. Anaylsts say that although BlackBerry’s hardware business is not worth anything, its service business and patents are still valuable. At the end of the second quarter, the company also had total cash and investments of about US$2.6 billion and no debt. The deal follows a US$7.2 billion offer that Microsoft Corp made this month for the phones and services business of another troubled phone maker, Nokia Corp. Fairfax head Prem Watsa, who owns 10 per cent of BlackBerry, stepped down as a board member because of potential conflicts when BlackBerry announced it was considering a sale last month. The company would no longer be traded publicly once the sale goes through.
“We believe this transaction will open an exciting new private chapter for BlackBerry its customers, carriers and employees,” Watsa said in a statement. “We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company.” Watsa is one of Canada’s best-known investors and is founder of Toronto-based Fairfax Financial Holdings Ltd. BlackBerry founder Mike Lazaridis recruited Watsa to join the company’s board when Lazaridis and Jim Balsillie stepped aside as its co-CEOs in January 2012.
BlackBerry shares plunged 17 per cent after the company announced Friday a loss of nearly $1 billion and layoffs of 4,500 workers. It gained 9 cents, or 1.1 per cent, to US$8.82 Monday.
BlackBerry said the general terms of the deal have been approved by its board and a special committee set up to look at options. The company said it will negotiate and execute a definitive transaction agreement with Fairfax by November 4.
During that time, BlackBerry is entitled to continue to find other buyers, but if BlackBerry backs out of the deal, it would owe Fairfax about US$157 million. This year’s launch of BlackBerry 10 and fancier devices that use it was supposed to rejuvenate the brand and lure customers. But the much-delayed phones have failed to turn the company around. At their peak in the fall of 2009, BlackBerry’s smartphones enjoyed global market share of more than 20 per cent, says Mike Walkley, an analyst with Canaccord Genuity. That is now just 1.5 per cent. (AP)
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