Fairfax Financial Holdings CEO Prem Watsa, whose company is leading a $4.7 billion bid to take BlackBerry (NASDAQ:BBRY) private, said he has confidence in both his ability to get the deal done and BlackBerry's future prospects.
BlackBerry and the consortium led by Fairfax have signed an initial letter of intent on the deal, but it is not finalized by any measure. The companies have until Nov. 4 to conduct due diligence and in the meantime BlackBerry can shop for another buyer. The consortium also does not yet have the financing in place for the $9 per share deal. (BlackBerry's shares are currently trading below that at $8.05.)
"We wouldn't put our name to such a high-profile deal if we didn't feel confident that at the end of the day that our due diligence would be fine and we'd be able to finance it," Watsa said in an interview with Reuters. Fairfax is BlackBerry's largest shareholder with a 9.9 percent stake in the company; Watsa said he did not expect Fairfax would need to contribute more than its existing stake for the bid.
"BlackBerry is one of Canada's great success stories," he said. "There is no question its fallen on hard times recently, but we have every confidence it will be successful again. We're putting a consortium together to make sure that that takes place."
Watsa declined to name any other members of the investment consortium, but said that while the group did not include any strategic players, one or two technology companies could possibly join.
Analysts remain divided over whether the Fairfax-led deal can succeed or if it is just a feint, since Fairfax will collect $157.2 million if BlackBerry attracts and accepts an offer better than $9 per share. "I don't think it was a serious bid," Ironfire Capital founder Eric Jackson told AllThingsD. "I believe Watsa is trying to smoke out others into making a full acquisition. I think the best buyer is an American one: Microsoft (NASDAQ:MSFT), Cisco or IBM. I think that's the play. If someone does a buyout, that $150 million break-up fee will go a long way to helping make back the money he put into this trade."
Some analysts have said BlackBerry could attract other buyers, but none emerged in the month that BlackBerry said it was openly exploring a potential sale. "While I've been skeptical, given what appeared to be a hastily thrown-together deal, I'm beginning to think they could actually close it," Wedge Partners analyst Brian Blair told AllThingsD. "I think it has become an issue of national pride to save BlackBerry."
Meanwhile, T-Mobile US (NYSE:TMUS) said it plans to stop carrying BlackBerry smartphones in its stores and instead will ship the devices directly to customers who want them. David Carey, executive vice president for corporate services, told Reuters about the plan and said that "keeping stock in the retail distribution system was inefficient" because BlackBerry phones have not generated enough demand. BlackBerry has signaled it intends to move away from the consumer smartphone market and focus more on the enterprise segment.
AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ) will continue stocking BlackBerry 10 smartphones, carrier representatives told AllThingsD. Sprint (NYSE:S) declined to comment.
BlackBerry also said that it canceled a conference call scheduled for Friday to discuss the company's quarterly financial results in the wake of the Fairfax offer. The company, which already previewed bleak results, will simply release them Friday morning. BlackBerry announced last Friday that it will cut 4,500 jobs--around 40 percent of its workforce--and will post a nearly $1 billion loss for its most recent quarter, mainly due to unsold BlackBerry 10 smartphone inventory.
For more:
- see this Reuters article
- see this separate Reuters article
- see this AllThingsD article
- see this separate AllThingsD article
- see this release
- see this NYT article
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