Blackberry To Be Sold To Private Investor For $4.7 Billion

Blackberry’s days as a publicly traded company are apparently over:

Smartphone maker BlackBerry has agreed to go private in a $4.7 billion deal led by its biggest shareholder, allowing the on-the-go email pioneer to regroup away from public scrutiny after years of falling fortunes and slumping market share.

The $9 a share tentative offer, from a consortium led by property and casualty insurer Fairfax Financial Holdings Ltd, will set a floor for any counteroffers that might emerge for Blackberry, which has been on the block since August.

As an investor, Fairfax Chief Executive Prem Watsa is often described as the Canadian Warren Buffett because he also takes the long view.

Blackberry shares peaked above $148 in June 2008 when the company’s devices were still the top choice for bankers, politicians and lawyers.

The stock, halted pending the announcement on Monday, closed below the offer price on Nasdaq, at $8.82, indicating the market’s lack of faith that other bids would emerge.

“I would think a competing buyout offer is quite unlikely,” said Elvis Picardo, strategist at Global Securities in Vancouver. “The miniscule premium, and the muted market reaction, is another indication that the market views the odds of a competing bid as slim.”

BlackBerry, based in Waterloo, Ontario, once dominated the market for secure on-your-hip email. But it introduced consumer-friendly touchscreen smartphones only after it lost the lead to Apple Inc’s iPhone and devices using Google Inc’s Android operating system.

BlackBerry has until November 4 to seek superior offers, which the Fairfax group has the right to match. The group is seeking financing from Bank of America Merrill Lynch and BMO Capital Markets to complete the deal and has until that November 4 deadline to conduct its due diligence.

In a press release, Fairfax Financial said that they intended to concentrate on “enterprise” (i.e., business) solutions, which strongly suggests that we’re unlikely to see a new, privately held Blackberry try to mount any kind of a challenge in a consumer market dominated by Apple and Android in which it has slipped to a mere bit player in recent years. Given that corporations seems to be slowly moving away from the Blackberry, one wonders how viable a business plan that can actually be.

FILED UNDER: Economics and Business, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Neil Hudelson says:

    I will say that while Blackberry’s demise looks nigh, reports of its death could be immature.

    It was the number one smart phone maker in 2008. That 2008. The one we just had, like 5 years ago.

    It fell because other companies out designed them, both in software and hardware.

    You know what? Given the right leadership, it can also outdesign current competitors.

    Apple and Windows phones have their hardcore supporters. Have you met anyone who is a dye-in-the-wool Android fan? It’s the software of choice because there is a wide variety of phones at low cost. There is certainly a wide market that blackberry can enter if it comes up with some decent phones.

  2. Trumwill says:

    @Neil Hudelson: I don’t know about dye-in-the-wool, but I have a hard time imagining switching away from Android.

    I’d be surprised if Blackberry made a comeback. The days of Smartphones For Grownups is over, and that was their edge. Without that, they’re Palm.

  3. @Trumwill:

    Yea, I’m with you. If you look at the market penetration numbers, Blackberry is so far behind in the consumer smartphone market that it would take a major tech innovation on their part to turn things around, and we haven’t seen anything like that from them in a long time.

    On some level this private investor is on to something with the idea of concentrating on the Enterprise market. However, with more and more employees pressuring their employers to open up corporate mobile data networks to iPhone and Android because that’s what they use for their personal phones, it’s going to be harder and harder for them to hold on to that market. The one area they seem to have a hold on is making secure smartphones for the government,. You can make some nice cash doing that, but it’s going to be a shadow of what Blackberry was back when its share were going for almost $150/share on Wall Street.

  4. RGardner says:

    Back in 2000-2004 I loved my Palm Pilot. My bosses had Blackberries then (AKA crack-berries) but I didn’t need email 24/7. I did some trades in the shares but got out well before HP bought them out. They got bypassed by the technology (Palm Treo smart phone was their final last gasp) just as Blackberry has been surpassed by Android and Apple today.

    Remember the press reports late 2008 about how President-elect Obama wouldn’t give up his Blackberry? What does he have today? Bet it isn’t a Blackberry.

  5. al-Ameda says:

    I think it’s close to autopsy time.

    They were at least two years too late coming to the market with a smartphone, and they arrived with their own OS (just what the market needed another smartphone OS) which guaranteed that they were not going to get anyone who wasn’t already a BB owner to check their new phone out. They were late to the game and ran themselves into a box canyon.

    The Enterprise Market? Well, Apple with their finger print ID and other features is probably going to have products that will appeal to government agencies.

    Adios BB, vaya con Buddha.

  6. grumpy realist says:

    The Financial Times has been covering the whole Blackberry collapse with the fascinated stare of a police officer at a 50-car pile-up.

  7. anjin-san says:

    Have you met anyone who is a dye-in-the-wool Android fan?

    Funny this should come up now, I just had lunch with a highly successful serial entrepreneur who spent 20 minutes telling me how much he loves his Android phone.

  8. pylon says:

    @RGardner: actually I think Obama has a blackberry. But I suspect he has little choice in it.