Fairfax Financials Offers BlackBerry Acquisition For USD 4.7 Billion, Has 6 Weeks To Find Alternative Buyer

The inevitable has happened – Blackberry has been acquired it’s Toronto based largest shareholder Fairfax Financial Holdings. The deal is subject to proper due-diligence and various clearances.

Fairfax Holding is pre-dominantly an insurance and investment business based in Toronto and owned by Prem Watsa. They were Blackberry’s largest shareholders with 10 percent stake in the company. The deal valued at USD 4.7 billion will give it’s shareholder a value of USD 9 per share. Blackberry shares have been trading between USD 9 to USD 10 for last 3 months!

According to the agreement, Blackberry has a window of 6 weeks to look for an alternative buyer (if any) who can offer a better deal. If that comes along, Blackberry can accept the alternative offer by paying a termination fee.

While Blackberry is currently publicly traded, upon acquisition, Fairfax will offer USD 9 in cash per share to acquire remaining 90 percent of Blackberry shares in the market. You can check out more details offinancial transaction here.

Our Take

Blackberry’s acquisition was on cards – It was bound to happen and given the way Blackberry’s fortunes are going down, this is not really a bad deal either for the company or their share-holders. Compared to Nokia’s acquisition by Microsoft, Blackberry surely has got a sweet deal (though Nokia’s deal was more of a strategic one).

Having said that, I would not be surprised if likes of Samsung or Sony or Dell or Lenovo or someone else may come forward in this six weeks window to acquire Blackberry. These companies will surely find lot more value in Blackberry compared to what Fairfax may.

Barbara Stymies, Chairman of BlackBerry’s board of directors has clearly stated that “Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium,”.

Blackberry currently has over USD 1 Billion worth of Unsold Phone inventory primarily due to Blackberry Z10’s failure to woos consumers.

Like I said, I see a strong chance that BlackBerry will interest many other buyers especially who want to make further inroads into mobile smartphone hw/sw space that is right now being led by Android and iOS’s of the world!

What’s your take?