Total Pageviews

Tuesday, September 24, 2013

Daily Report: Questions Arise From BlackBerry Buyout Offer

An offer to take BlackBerry private does not end the uncertainty surrounding the ailing smartphone maker, Ian Austen and David Gelles report.

BlackBerry said on Monday that it had signed a letter of intent from a group led by Fairfax Financial Holdings, a Canadian insurance and investment company, to pay shareholders $9 a share in cash to take the company private, pending a variety of conditions.

The $4.7 billion offer from Fairfax, which already owns about 10 percent of BlackBerry, is a powerful symbol of the phone maker’s decline. In June 2008 â€" a time when BlackBerrys defined smartphones â€" the company had a stock market value of $83 billion.

Any deal is far from done. Fairfax did not identify the other investors in its consortium, which is seeking financing. And while the offer could flush out potential rival offers, it is unclear who might be tempted to come forward, given the company’s uncertain prospects. Investors gave a muted endorsement on Monday, with BlackBerry shares rising 1 percent, to $8.82, but failing to reach the $9 bid price.

The offer came after the company announced on Friday that it expected to report a quarterly loss of nearly $1 billion, stemming largely from the failure of the BlackBerry 10 line of phones that were supposed to revive the company. BlackBerry also outlined plans to lay off about 40 percent of its already reduced work force, or around 4,500 people.

Sensing the opportunity to halt the fall in company’s stock prompted by that announcement, and the potential to kick off an auction, BlackBerry’s board seized on the offer, quickly signing a letter of intent. The particulars of the deal’s announcement came together in a matter of hours on Monday morning.