Today BlackBerry announced a $9 per share offer for its outstanding stock, a deal worth around $4.7 billion. The $9 per share price is a slight premium over its current stock price, which traded at $8.23 before it was halted pending the news.
BlackBerry had declined more than 5 percent on the day. Fairfax Financial, which offered the $9 per share deal, already owns about 10 percent of the company’s stock. BlackBerry’s board has approved the transaction, and a letter of intent has been signed. This feels like a pretty much done deal.
However, the board is open to rival offers provided that they are “alternatives superior to the present proposal from the Fairfax consortium.” Fairfax will pursue funding for the deal from, according to the release, Bank of America Merrill Lynch, and BMO Capital.
There is a kill fee of $0.30 per share if BlackBerry backs out and accepts a different bid.
BlackBerry had about $2.8 billion in cash and equivalents at the end of its most recent quarter. That, paired with whatever value its intellectual property might retain, means that the value of its business operations is vanishingly small. The $9 per-share price for BlackBerry is less than a 10 percent premium on its closing price, calculated on a very, very bad day for the company’s stock. Expect some investors to be less than enthused to see the company exit for so little.
It’s hard to not view this as the end of BlackBerry as we have known it. Fairfax, to its credit, is putting a brave face on the matter, stating that the deal will “open an exciting new private chapter for BlackBerry, its customers, carriers and employees.” So, it claims to not have plans to break the company into small pieces and vend it off in chunks. Even more, Fairfax intends to “continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers.”
If that is true, and Fairfax has a real plan to turn the company around, and perhaps transmorgify it back into a firm that pushes technology forward instead of reacting to its change in a ham-fisted fashion, more power to it. BlackBerry appears set to join Dell in the hopefully healing purgatory of life as a formerly public and now private firm.
Top Image Credit: Honou