Fairfax Financial, a Canadian insurance company is entering into a deal with Blackberry. The mobile phone company has already agreed in principle to a Fairfax takeover. The Canadian company is buying all the shares for $4.7 billion. Blackberry stated that Fairfax has about 10% in terms of stock and is the largest shareholder at present. Fairfax declared that it is willing to give $9 per share to acquire Blackberry in its entirety.
On the negotiating table
Last Monday Blackberry announced that it had entered into a deal with Fairfax Financial Holdings Limited and signed an agreement indicating its intent to be purchased. Both companies have agreed to discuss and negotiate the terms of their transaction until the 4th of November 2013. According to Prem Wasta, CEO and Chairman of Fairfax, the possible privatization of Blackberry by Fairfax will open a new and exciting chapter for all Blackberry carriers, customers and employees as well. Wasta added that they intend to immediately execute strategies focused on a long term goal that would undoubtedly answer all the underlying faults and weaknesses that Blackberry may have to address.
Viable options
Even though Blackberry had commented about the generous offer from Fairfax and is somewhat considering the deal to be completed after a few months of negotiations, the smartphone company is still open to other offers. The company openly admitted that it would still pursue options and explore opportunities while it is still on the negotiating table with Fairfax.
Just recently, Blackberry publicly announced that is has resorted to cutting losses by initiating job cuts affecting more than 4,500 employees. This was already expected by Blackberry since the release and sales of its newest handsets did not actually kick-off. With continuing losses that the company has sustained over the past few years due to poor global sales performance, Blackberry has anticipated a possible sale since August.
That being said, the Canadian smartphone company commented that it is not exclusively considering Fairfax as the only possible buyer. Blackberry added that it is continually looking for other potential buyers and good offers with other interested parties that might actually guide the company back to the right path.
Experts’ view
The slow deterioration of Blackberry in the mobile industry gathered much attention, considering its dominance in the market before Apple and Samsung took over. Once the number one mobile phone provider in the world, Blackberry is probably going private in order to bounce back and reclaim its former glory.
Experts like Brian Colello of Morningstar commented about Blackberry’s move to go private. According to him, this would allow the company to properly restructure and reevaluate the next steps it is going to take in order to remain relevant and go with the flow. Colello added that it is a timely opportunity for Blackberry to enter into a deal since it need not be subject to public inquisition while reinventing its strategies.
CCS Insight chief of research Ben Wood also commented that the forthcoming deal with Fairfax gives Blackberry the chance to have the space it needs in order to decide on new and better strategies.
Photo Credit: Blackberry Q10
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