BlackBerry Cancels Sale Process, Will Remain Independent

In an unexpected development, BlackBerry, which had been seeking buyers, has abandoned its plan to sell itself. Until Nov. 4, 2013, talks had been proceeding with a Canadian investor group lead by Fairfax Financial Holdings.

Apparently, Fairfax Financial Holdings was unable to raise the money it needed to make the bid, and BlackBerry now will try to raise funds by selling bonds. But it appears Fairfax will be among the entities buying some of the new bonds.

Fairfax Financial Holdings Limited will acquire U.S. $250 million worth of the convertible bonds. The transaction is expected to be completed within the next two weeks.

The bonds are convertible into common shares of BlackBerry at a price of U.S. $10.00 per common share.

At closing, John S. Chen will be appointed executive chairman of BlackBerry's Board of Directors. Prem Watsa, chairman and CEO of Fairfax, will be appointed lead director and chair of the compensation, nomination and governance committee. Current CEO Thorsten Heins and board member David Kerr will resign from the board.

Those moves suggest either that the board became sharply divided about BlackBerry strategy, and not simply that the Fairfax Financial Holdings bid was deemed insufficient. In that case, the board would likely have solicited additional bids.

Others might suggest that the inability to raise funds for the $4.7 billion bid simply suggests there is not support among investors for that type of a deal.

Yet others might argue that the bond deal is a stopgap measure, and that a future sale, though not for the $4.7 billion purchase price, still is envisioned.

Other potential buyers were said to include Cerberus Capital Management, Qualcomm, Lenovo and BlackBerry co-founders Mike Lazaridis and Doug Fregin.

The move is a blow to BlackBerry bankers J.P. Morgan Chase & Co. and Perella Weinberg Partners, which were retained to manage the sale process. The bankers reportedly had spoken to Facebook, and had sought indications of interest from other firms including Microsoft, LinkedIn and Oracle.
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