Largest shareholder to take smartphone maker private

Tech pioneer BlackBerry made a last roll of the dice and agreed to a probable US$4.7bil buyout by a consortium planning to take the struggling smartphone maker private.

BlackBerry was once a leader in mobile tech but has been squeezed by rivals Android and Apple, which coincidentally announced record sales of its latest iPhone on Monday.

The Ontario-based company said it had signed a letter of intent with a group led by Fairfax Financial Holdings Ltd, which has offered to acquire the company.

Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry’s largest shareholder with 10% of its shares.

Watsa resigned from BlackBerry’s board in August when it announced a search for a suitor.

Watsa said the sale “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.”

Ironically, the announcement came on the same day that Apple said it sold a record nine million iPhones in three days after launching two new versions of its smartphone last week.

Under the proposed BlackBerryFairfax deal the consortium would offer US$9 for each outstanding share, and Fairfax would contribute its own shares in the transaction.

BlackBerry said its board supported the plan. A firm deal, once due diligence is completed, is expected by Nov 4. It also hinges on the consortium obtaining financing.

BlackBerry said it would continue a search for a possibly better suitor in the interim.

BlackBerry stock was down 6% to US$8.23 before trading was halted just prior to its announcement. Its shares bounced back in afternoon trading to close at US$9.08 but remain far below the stock’s historical high.

Analysts reacted with measured optimism. “This is probably the best possible outcome of several unattractive options for BlackBerry,” said analyst Jack Gold of J. Gold Associates.

While BlackBerry helped create a culture of mobile users glued to smartphones, many have since moved to iPhones or devices using Android software like Samsung’s Galaxy range. — AFP