Blackberry in $4.7bn takeover deal with Fairfax

 Struggling
smartphone maker
Blackberry has
agreed in principle
to be bought by a
consortium led by
Fairfax Financial
for $4.7bn (£3bn).
Blackberry said in
statement that
Fairfax, its largest
shareholder with
about 10% of the stock, had offered $9 a share in cash
to buy the company.
Trading in Blackberry shares was temporarily halted in
New York pending the announcement.
On Friday, Blackberry announced 4,500 jobs cuts in a
bid to stem losses.
The Canadian company said it expected to make a loss
of up to $1bn after poor sales of its new handsets. In
August, Blackberry said it was evaluating a possible
sale.
On Friday, the company announced that it had "signed a
letter of intent agreement under which a consortium to
be led by Fairfax Financial Holdings Limited has
offered to acquire the company subject to due
diligence".
The statement continued: "Diligence is expected to be
complete by November 4, 2013. The parties' intention
is to negotiate and execute a definitive transaction
agreement by such date."
However, Blackberry said it was not in exclusive talks
with Fairfax and would continue to "actively solicit,
receive, evaluate and potentially enter into
negotiations" with other potential buyers.
Canadian billionaire Prem Watsa, Fairfax's chairman
and chief executive, said: "We believe this transaction
will open an exciting new private chapter for
Blackberry, its customers, carriers and employees.
"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."
'End game'
Brian Colello, analyst at Morningstar, said that taking
Blackberry private would allow the company to
reorganise without being under the glare of Wall
Street investors.
He said: "Based on the company's disastrous earnings
warning on Friday, I think a deal had to happen and the
sooner the better. This is probably the only out for
investors and the most likely outcome.
"The benefit to this sort of takeover is the ability for
Blackberry and the consortium to reinvent the company
without public scrutiny. It appears that the end game is
going to be whether Blackberry can emerge as a niche
supplier of highly-secured phones to enterprise
customers and governments."
Ben Wood, chief of research at CCS Insight, also said
that a deal with Fairfax would give Blackberry
breathing space assess its strategic options.
"Early indications suggest a retrenchment to the
business market. Wider structural changes such as
spinning off Blackberry Messenger and cutting back on
hardware are also likely be carefully reviewed."
Blackberry's financial problems came to a head this
year following disappointing sales of its new Z10 model
smartphone.
Released in January - after many delays - the phone
has failed to enthuse consumers.
Over the summer, word trickled out the company had
hired a series of advisers to help it explore options.