BlackBerry may soon find itself in what Bloomberg says is the lowest-costing buyout of a similar-sized N. American technology company yet, having reached a tentative $4.7 billion deal with major shareholder Fairfax Financial.
The deal has the Canadian insurance firm offering $9 per BlackBerry share, for an amount covering 90% of the company-- quite the plunge for a company once valued at $83 billion.
Fairfax owns the remaining 10% of BlackBerry.
Rubbing further salt in the wound is the fact that while the deal does not oblige Fairfax to actually buy up the smartphone maker, BlackBerry would have to pay a breakup fee worth over $150 million should it find an alternate buyer willing to pay a higher price by 4 November 2013.
“It is being valued like a broken company,” William Blair & Co. analyst Anil Doradla tells Bloomberg. “They had a chance to potentially execute on an M&A deal when these guys were doing better. So by the time [current BlackBerry CEO] Thorsten Heins came on board, I think it was too little, too late.”
The news comes after disastrous preliminary fiscal Q2 2014 BlackBerry results, with operating losses reaching $950-995 million (including a record inventory writedown worth $930-960m) on revenues of approximately $1.6 billion.
The company will also slash 4500 jobs, and will focus away from the consumer to the enterprise and prosumer markets.
Will BlackBerry manage to find rescue, if not a higher bidder? Probably not, although the Wall Street Journal reports co-founder and former co-CEO Mike Lazaridis is "considering a separate offer," and has "serious" interest in the company. Until he makes a move, or Fairfax Financial confirms its coughing up the cash, though, consider BlackBerry as being in a state of limbo.
Go BlackBerry Enters into Letter of Intent with Consortium led by Fairfax Financial
Go BlackBerry Preliminary Fiscal Q2 2014 Results
Go BlackBerry's Descent Begets Cheapest Tech Deal (Bloomberg)
