Fairfax Bids For BlackBerry: $4.7 Billion Offered For Struggling Smartphone Maker

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BLACKBERRY SALE
Fairfax makes offer for BlackBerry: In this Jan. 30, 2013 photo, Thorsten Heins, introduces the BlackBerry Z10 (AP Photo/Mark Lennihan, File) | AP

A consortium led by Fairfax Financial Holdings has offered to buy BlackBerry Ltd. Toronto-based Fairfax is offering US$9 cash for each share it doesn't already own, in a deal that values BlackBerry at about US$4.7 billion.

The $9 U.S. a share bid offers shareholders only a slight premium from the last price, $8.23 U.S., before trading was briefly halted Monday afternoon.

The $4.7 billion Fairfax is offering for BlackBerry equals about one per cent of competitor Apple's $444-billion valuation.

Fairfax Financial is an investment company which already owns a 9.9 per cent stake in the company. Its CEO, Prem Watsa, who has been called "Canada's Warren Buffet," recently resigned from BlackBerry's board of directors.

"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," Watsa said in a statement.

"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."

Under terms outlined in the letter of intent, the group led by Fairfax would take BlackBerry private. The consortium is giving BlackBerry six weeks, until Nov. 4, to conduct due diligence on the proposed deal.

BlackBerry will be allowed to solicit and evaluate offers from other potential bidders, but if it enters into another agreement would have to pay 30 cents per share to Fairfax.

The offer price is slightly higher than the $8.23 the shares were worth just before trading halted, but substantially higher than its five year low price of $6.30, which BlackBerry stock in September, 2012.

It is the second time in as many days the embattled smartphone maker halted its shares for a major announcement. On Friday, the company announced it was laying off 4,500 employees worldwide.

Still, the company is sitting on $2 billion in cash.

Fairfax is an investment company that is mainly focused on the insurance industry.

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