On August 12, 2013 BlackBerry announced that it had formed a special committee to probe “strategic alternatives” to turn the company around, alternatives included seeking investments, forging alliances and even selling off the company. Fairfax Financial Holdings, currently the largest BlackBerry shareholder, submitted a non-binding buyout bid of $4.7 billion soon after that. Fairfax had until November 4th to finalize its bid after it had conducted due diligence, but as it stands right now, Prem Watsa’s outfit is not going to take BlackBerry private. The BlackBerry buyout plan has been shelved and instead of buying it, Fairfax and “other institutional investors” have decided to invest $1 billion in the ailing Canadian manufacturer.
The $1 billion being invested through debentures can be converted into common stock at $10 a share. There has been some shuffling at the top as well. CEO Thorsten Heins, who took over from Mike Lazaridis and James Balsillie in January last year will be replaced by John S. Chen as interim CEO after this transaction is closed, which should take about two weeks. Prem Watsa, Chairman and CEO of Fairfax returns to the company’s board as Lead Director and Chair of the Compensation, Nominating and Governance Committee, whereas Heins will also give up his spot at the board after closing. John S. Chen is the former CEO of Sybase, and is known for saving Sybase from bankruptcy prior to its acquisition by Germany’s SAP in 2010. He will remain BlackBerry’s interim CEO until a successor is appointed.
The market doesn’t seem to be too happy with this outcome, shares of BlackBerry have dived nearly 12 percent after the press release hit the wire, trading just above $6 per share. It remains to be seen how this development affects the potential buyout bid that BlackBerry co-founders Mike Lazaridis, Douglas Fregin were expected to make along with Qualcomm and Cerberus Capital Management.
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