BlackBerry Ltd. (NASDAQ:BBRY) entered a tentative agreement for a $4.7 billion buyout offer from a group led by its biggest shareholder, Fairfax Financial Holdings Ltd. – forging a path to go private after a new line of smartphones failed to catch on.
BlackBerry said Monday that a letter of intent has been signed and its shareholders will receive $9 in cash for each share. Fairfax head Prem Watsa is a former board member who owns 10 percent of BlackBerry. Watsa stepped down when BlackBerry announced it was considering a sale last month. The billionaire is one of Canada’s best-known value investors.
Trading of the company’s stock was halted ahead of the news. BlackBerry shares plunged after the company announced Friday a loss of nearly $1 billion and layoffs of 4,500 workers.
The Fairfax-led group’s $9 a share offer represents a 3.1 percent premium over BlackBerry’s closing price last week. The acquirers will have six weeks to scrutinize BlackBerry’s books, a span in which the smartphone maker can seek other takeover offers.
The Waterloo, Ontario-based company said last week that it’s cutting 4,500 jobs and taking a writedown of as much as $960 million for unsold inventory of its Z10 phone – a touch- screen device unveiled in January as its answer to the iPhone.
Chief Executive Officer Thorsten Heins had bet the Z10 would become BlackBerry’s new flagship, restoring cachet and prosperity to the one-time smartphone leader. Instead, the model fizzled with consumers and contributed to the company’s weakest quarterly sales in six years.
BlackBerry, credited with inventing the first smartphones more than a decade ago, once sold products that were so popular and addictive they were known as CrackBerrys. In recent years, the company failed to keep pace with Apple Inc. and Samsung Electronics Co., which offered better Web browsing and a wider range of applications. BlackBerry’s share of the global smartphone market shrank to 2.9 percent in the second quarter from 4.9 percent a year earlier, according to IDC. It has fallen to fourth place behind Google Inc.’s Android, Apple’s iOS and Microsoft Corp.’s Windows Phone platform.
(The Associated Press and Bloomberg News contributed to this report).
