Last update: 10-Dec-2013 9:56 pm
Wednesday, December 11, 2013
Trinidad & Tobago Guardian Online
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Fairfax chief: I won’t abandon BlackBerry bid
TORONTO—The head of Fairfax Financial Holdings Ltd says he has every intention of completing the acquisition of BlackBerry, despite doubts that the US$4.7 billion deal for the troubled smartphone maker will go through. BlackBerry announced earlier this week that Fairfax signed a letter of intent that “contemplates” buying BlackBerry for US$9 a share. Fairfax, BlackBerry’s largest shareholder, is trying to attract other investors.
BlackBerry shares on Wednesday lost 6 per cent, closing a dollar below Fairfax’s bid on fears the deal won’t happen. There is no breakup fee should Fairfax walk away, but Fairfax Chief Executive Prem Watsa told The Associated Press his firm is not in the business of making an offer and then walking away or redoing the deal.
“We’ve got a track record of 28 years of completing what we’ve done. We’ve never re-negotiated,” Watsa said. “We thought long and hard before we offered US$9 dollars a share and we’re not in the business of offering a number and at the last minute changing the figure. Over 28 years our reputation is stellar on that front. We just don’t do that.” Watsa noted the deal is subject to six weeks of due diligence but stressed Fairfax won’t abandon it.
Watsa stepped down as a board member last month because of potential conflicts when BlackBerry announced it was considering a sale. If the proposed deal goes through, BlackBerry would go private and no longer be traded publicly. Watsa said Fairfax won’t be contributing more to the bid than the ten per cent it already owns. “The ten per cent is like US$500 million. It’s a significant amount of money,” he said. “We’re going to bring equity partners and we think the company will be very well capitalised.”
He declined to name the other investors he is trying to bring in. Fairfax’s average cost per share in acquiring BlackBerry shares is US$17. The Canadian insurance and investment firm has lost hundreds of millions on BlackBerry.
Analysts say that although BlackBerry’s hardware business is not worth anything, the company still owns valuable patents. BlackBerry is also strong in having total cash and investments of about US$2.6 billion, with no debt, though it’s burning through that stockpile. In just the past few months, it’s spent about half a billion dollars. Watsa said Fairfax is not buying BlackBerry to break it apart.
“Rest assured when we do this it won’t be done to split the company,” Watsa said. “I mean one of the reasons I went on the board, and I said it publicly, was to keep the company in Canada and to make sure it survives and exists in Canada. It is one of Canada’s most successful companies. Companies do fall on hard times and they come back again and we expect this company to do the same.”
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