BlackBerry agrees sale to biggest shareholder
Fairfax-led consortium to take smartphone pioneer private for $4.7bn
Canadian smartphone vendor BlackBerry has agreed a $4.7bn sale to its biggest shareholder, which will take the once market darling private.
The initial $9-per-share offer has been tabled by a consortium led by Fairfax Financial Holdings Ltd. To avoid potential conflicts of interest, Fairfax chief executive Prem Watsa resigned from BlackBerry's board when plans of the company's sale were made public.
Any counter-bid must be lodged before November 4 - by which time Fairfax must also have completed due diligence - but Reuters reported that BlackBerry shares closed $8.82 on the Nasdaq exchange, indicating investors' doubt that other interested parties will emerge.
"I would think a competing buyout offer is quite unlikely," said Elvis Picardo, strategist at Global Securities in Vancouver. "The miniscule premium, and the muted market reaction, is another indication that the market views the odds of a competing bid as slim."
Go-private ventures are usually conducted so that companies can take a long-term view of a business that needs a strategy change. BlackBerry's woes began when a previously business-oriented market became consumer-focused and its products failed to appeal to the tastes of those consumers.
After a new platform release in BlackBerry 10 and a range of supporting handsets, BlackBerry has admitted defeat and announced it will focus on an enterprise strategy, which spells the probable end of its devices unit.
"BlackBerry's supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices," said Jan Dawson, chief telecoms analyst at Ovum.
"It's likely that BlackBerry will be out of the device business entirely by the middle of next year.
"The next challenge is that BlackBerry's other businesses are all to a greater or lesser extent dependent on its devices business. BlackBerry Messenger's installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend. It's mobile device management business is entirely based on its ability to manage BlackBerry devices, and its cross-platform management is much less well established than those of major competitors like MobileIron and Airwatch."