BlackBerry scraps buyout plan

Ailing smartphone vendor appoints new turnaround CEO, seeks cash for rebuild

Tags: Blackberry (www.blackberry.com)CanadaMergers and acquisitions
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BlackBerry scraps buyout plan After yesterday’s market tumble, BlackBerry is now worth just $3.38bn. (Getty Images)
By  Stephen McBride Published  November 5, 2013

Canadian smartphone vendor BlackBerry has elected to stop seeking a buyer for its ailing business and yesterday announced that CEO Thorsten Heins would step down, Reuters reported.

Instead of a sale, BlackBerry said it would raise $1bn through the issue of convertible notes to a group of long-term investors, including its largest shareholder, Fairfax Financial Holdings. The news sent BlackBerry's stock into a tail spin, shaving 16% off its value as confidence in the company's future disintegrated.

The company named John Chen as its interim CEO and executive chairman. Chen is regarded as a turnaround specialist, having rescued the balance sheet of Sybase Inc in the 1990s; the enterprise software company was eventually acquired by SAP AG in 2010.

One-time smartphone pioneer BlackBerry saw its market capitalisation dive from a 2008 peak of over $80bn to around $5.5bn, following the emergence of consumer-oriented smartphones that capitalised on a category largely invented by BlackBerry. After yesterday's market tumble, the company is now worth around $3.38bn. Fairfax lodged the only formal bid for the struggling business, but insiders said CEO Prem Watsa had trouble raising the $4.7bn needed to complete the transaction.

In the interim, while slashing the size of its workforce and pursuing the sale of properties in its home town of Waterloo, Ontario, BlackBerry approached a number of prospective alternative buyers, including SAP, Lenovo and Facebook.

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