NEW YORK – On Friday, the New York Times (NYSE:NYT) reported that Qualcomm (NADAQ:QCOM) had potentially joined forces with a consortium that included the private equity firm Cerberus Capital Management and two of Blackberry’s (NASDAQ:BBRY) co-founders, Mike Lazaridis and Doug Fregin, to bid for the troubled smartphone manufacturer.
While details of the bid have not been made public, it would appear that Lazardis and Fregin hoping to use Qualcomm’s deep pockets to regain control of the company they founded. However, the deadline for bidders in the Blackberry auction is Monday and the Times was not clear if a final offer would be completed in time.
Looking at the players, Qualcomm has wireless experience and a large corporate entity that could backstop BlackBerry’s losses; Cerberus brings cash, and Lazaridis and Fregin would ease the group’s path to control.
Once the leader in smartphones, Blackberry has ceded the market, and profits, to rivals Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Samsung (KS:005930). While the company has been in a death spiral for months, depths of their troubles became clear in recent weeks, as the company reported a quarterly loss of nearly $ 1 billion and a steep decline in revenue.
Should the Qualcomm group submit a bid for Blackberry on Monday, the only competition would appear to be a highly conditional $9-a-share bid from Fairfax Financial Holdings, a Canadian insurance and investment company. That bid would value BlackBerry, which is hemorrhaging cash, stuck with unsold inventory and apparently directionless, at $4.7 billion.
Fairfax currently owns 10 percent of Blackberry; however, it was unclear whether Fairfax has arranged financing for the deal to submit a formal bid on Monday.
In the past three months, shares in Blackberry have fallen more than 11 percent and year-to-date the company is down more than 34 percent. Other groups that have reportedly considered making bids for Blackberry include Lenovo (HK:0992), Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOG). However, none of these companies has submitted formal bids and it would look as if many are waiting on the sidelines to see the outcome of Monday’s auction as the price to acquire Blackberry might drop even further, especially if no one submits a bid.
If the Qualcomm consortium does make an offer over the weekend, BlackBerry may announce its receipt of a proposal Monday morning. At that point, the company could extend the deadline for final bids, or announce its choice of a bid as late as Tuesday morning.