Blackberry agrees in principle to $4.7 billion takeover

Blackberry’s largest shareholder, Fairfax Financial, has led a bid to acquire Blackberry for $4.7 billion.

Fairfax currently owns about 10% of the company’s stock.

A consortium led by Fairfax has offered $9 per share to buy Blackberry, which has agreed “in principle” to the proposed takeover.

In a press release, Blackberry announced:

“BlackBerry Limited today announced it has signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings Limited has offered to acquire the company subject to due diligence.

The letter of intent contemplates a transaction in which BlackBerry shareholders would receive U.S. $9 in cash for each share of BlackBerry share they hold, in a transaction valued at approximately U.S. $4.7 billion. The consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax. Fairfax, which owns approximately 10 percent of BlackBerry’s common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction.”

Chair of BlackBerry’s Board of Directors, Barbara Stymiest said “The Special Committee is seeking the best available outcome for the Company’s constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”

In other words, Blackberry will carry on exploring other options while the Fairfax negotiations are ongoing.

Chairman and CEO of Fairfax, Prem Watsa said:

“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we 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 around the world.”

Last week, Blackberry announced that it was reducing its workforce by 40% (4,500 jobs) in a bid to reduce losses of about $1 billion.

Apple sold over 9 million new iPhone 5s and iPhone 5c models in just three days.

Fairfax Financial Holdings Limited, based in Toronto, Canada, is a financial holding company engaged in property, casualty, and life insurance and reinsurance, investment management, and insurance claims management.

Fairfax has more than 8,200 employees around the world, of whom 5,000 work in the U.S. Its head office in Toronto only has 30 employees.

Video – What is takeover?

When one business gobbles up another, it is a takeover. When two equally-sized business entities get together and become one, it is a merger.