Struggling BlackBerry (BBRY) unveiled a $4.7 billion preliminary deal on Monday afternoon to be acquired by a consortium led by billionaire Prem Watsa’s Fairfax Financial.
The proposed transaction, which is subject to a six-week period of due diligence, values the embattled smartphone maker at $9 a share.
During the due diligence window, BlackBerry will have the opportunity to shop around for alternative bids, subject to a termination fee.
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees,” Watsa said in a statement.
Toronto-based Fairfax, which is BlackBerry’s largest shareholder with a 10% stake, had been rumored to be the front-runner to acquire the company. Fairfax said it plans to contribute the shares it currently owns into the transaction.
Watsa, who is known as Canada’s Warren Buffett, resigned as a BlackBerry director in August when the company announced plans to explore a possible sale. Watsa cited “potential conflicts that may arise during the process.”
“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,” Watsa said.
The buying group is seeking financing for the buyout from Bank of America Merrill Lynch (BAC) and BMO Capital Markets (BMO).
“The special committee is seeking the best available outcome for the company’s constituents, including for shareholders,” said Barbara Stymiest, chairman of BlackBerry’s board. “Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”
Shares of Waterloo, Ontario-based BlackBerry were halted ahead of the news. Before the halt, they were trading down 5.62% at $8.23 as analysts reacted negatively to the company’s dire profit warning on Friday.
Fox Business
