Report: BlackBerry's board rejected offers to break up company

BlackBerry's (NASDAQ:BBRY) board does not think breaking up the company into separate pieces is a sound idea, even though Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Lenovo and others have expressed interest in parts of the company, according to a Reuters report.

The report, citing unnamed sources, said the board knocked down bids from several technology companies to acquire particular BlackBerry assets because board members believed it would not be in the best interest of employees, customers and suppliers as well as shareholders. Apple and Microsoft were keen to get BlackBerry's patent trove, the report said, while BlackBerry also held discussions with Cisco Systems, Google (NASDAQ:GOOG) and Lenovo about selling parts of itself.

BlackBerry and the technology companies all declined to comment, according to Reuters.

BlackBerry announced last week it had halted its plans to go private in a $4.7 billion deal led by Fairfax Financial Holdings, its largest shareholder, and will instead receive $1 billion in financing in the form of convertible notes from Fairfax and other investors.

In October, Reuters reported BlackBerry was holding talks with Cisco, Google and SAP about selling all or part of itself, and had asked for preliminary expressions of interest from potential strategic buyers, which also included Intel, LG Electronics and Samsung Electronics.

In addition to hardware, software and patents, BlackBerry operates a secure global server network. The report said the board felt the financing BlackBerry received provided the most near-term certainty and the best chance for a turnaround. One source said the board also took into consideration the current cost of breaking up the company, which would have created liabilities, including in its commitments with suppliers.

Meanwhile, Fairfax CEO Prem Watsa, one of Canada's most wily and contrarian investors, told the Globe and Mail that while he recruited interim BlackBerry CEO John Chen, a former CEO of Sybase, he did not ask former BlackBerry CEO Thorsten Heins to leave.

"Thorsten did a very good job given the hand that he was dealt, but resigned because you can't have two people being in charge," Watsa said. "He said to me, 'It's very appropriate for me to resign. I like John Chen, but I'm a CEO and there is one person in charge.'"

"Neither John Chen nor myself asked him to resign," Watsa said.

Fairfax holds a roughly 10 percent stake in BlackBerry, and Watsa will be appointed lead director and chair of the compensation, nomination and governance committee of BlackBerry's board. Watsa had resigned from the board in mid-August, when BlackBerry announced its review of strategic alternatives, to avoid any conflicts of interest.

Interestingly, Watsa also said that Fairfax would have worked with BlackBerry co-founder and former co-CEO Mike Lazaridis, who disclosed last month that he and fellow co-founder Doug Fregin had hired Goldman Sachs as advisers and were thinking of a potential takeover bid for BlackBerry. Lazaridis and Fregin, working with Cerberus Capital Management, put forth a highly conditional proposal for BlackBerry that was rejected by the board, the Globe and Mail report said.

"Mike's a good friend," Watsa said. "Mike wanted to go at this on his own. We'd have been happy to work with Mike, but he wanted to do this on his own."

For more:
- see this Reuters article
- see this Globe and Mail article
- see this NYT article
- see this Bloomberg article

Related Articles:
BlackBerry investor Fairfax draws support from Qatar, Canadian funds
Report: Lenovo wanted to bid for BlackBerry, but Canadian government signaled opposition
Interim BlackBerry CEO Chen has turnaround experience, but faces challenges
BlackBerry halts sale process, gets $1B investment and ousts CEO Heins
BlackBerry issues open letter to customers, says it's here to stay

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