OTTAWA – Late Monday, embattled smartphone maker BlackBerry announced that it has agreed to go private in a $ 4.7 billion deal led by its largest shareholder. The company, which pioneered mobile data, will use the transition from a public company to a private company to regroup away from public scrutiny after years of falling fortunes and slumping market share.
The offer to take the company is led by property and casualty insurer Fairfax Financial Holdings Ltd and was set at $ 9 per share – BlackBerry shares closed Monday at $ 8.82.
It is believed the share offer will set a floor on any counteroffers that might emerge. However, some analysts believe Fairfax might have overpaid by as much as $ .50 per share. Fairfax CEO, Prem Watsa, is often described as the Canadian Warren Buffett because he also takes the long view.
It has been a long, downhill slide for BlackBerry, the company’s share are trading well of the well off the all-time high of $ 230.52, which was reached on June 20, 2007. The first iPhone was released in the U.S. on June 29, 2007 and Blackberry has never been able to recover.
According to Elvis Picardo from Global Securities, ‘I would think a competing buyout offer is quite unlikely. The miniscule premium, and the muted market reaction, is another indication that the market views the odds of a competing bid as slim.’
Donald Yacktman, president and founder of Yacktman Asset Management which holds something under 1 percent of BlackBerry according to Thomson Reuter’s data, said he does not expect a counteroffer to emerge.
The company has until November 4 to find better offers, which the Fairfax Group has the right to match. Fairfax has received financing from Bangkok of America Merrill Lynch (NYSE:BAC) and BMO Capital Markets (Toronto:BMO). It is also believe that several of Canada’s pension funds might also be involved as well.
While many believe going private is the only move for the embattled company, it is unclear how Blackberry will recover from recent setbacks as an aborted app release of BlackBerry Chat on iOS and Android over the weekend. Furthermore, the company has lost significant share in all segments and recent announcements that BlackBerry will focus on enterprise solutions is believed to have little impact on the company’s fortunes.