WATERLOO, ON – BlackBerry Ltd. said Monday that it has signed a letter of intent agreeing to be purchased by a consortium led by shareholder Fairfax Financial Holdings for US$4.7 billion.
Under the deal, shareholders would receive US$9.00 in cash for each share of BlackBerry share they hold. The consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax. Fairfax, which owns approximately 10% of BlackBerry's common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction, and take the company private.
The BlackBerry board of directors, acting on the recommendation of a special committee of the board of directors formed in August, has approved the agreement. The Fairfax consortium has until November 4 to complete its due diligence, and BlackBerry is allowed to actively solicit and evaluate rival offers until that date.
"The Special Committee is seeking the best available outcome for the Company's constituents, including for shareholders”, said Barbara Stymiest, chair of BlackBerry's board of directors, in the announcement. “Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium."
"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees”, added Fairfax chairman and CEO Prem Watsa. “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."
The news comes just days after BlackBerry announced plans to cut approximately 4,500 staff after posting a second quarter loss of nearly US$1 billion. The company said late Friday that revenue for the second quarter ended August 31 is expected to be approximately $1.6 billion, far below the forecast of $3.06 billion, of which approximately 50% is expected to be service revenue on shipments of approximately 3.7 million smartphones. It blamed the loss largely on an inventory charge of between $930 million and $960 million, and a pre-tax restructuring charge of $72 million.
The company also said that it is planning to downsize its smartphone portfolio from six devices to four, cut operating expenses in half by the end of the first quarter of fiscal 2015, and refocus on the enterprise and prosumer market with products that include hardware, software and services.
