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Huge! BlackBerry Enters into Letter of Intent with Consortium led by Fairfax Financial

BlackBerry Canada

Big news today. Check out the details below. Seems like this is pretty much a done deal for $9  a share at U.S. $4.7 billion.

BlackBerry Enters into Letter of Intent with Consortium led by Fairfax Financial
– BlackBerry shareholders would receive U.S. $9 per share in cash

– Transaction valued at approximately U.S. $4.7 billion

– Consortium permitted 6 weeks to conduct due diligence

– BlackBerry entitled to go-shop during due diligence period, subject to payment of a termination fee in the event alternative offer accepted
WATERLOO, ONTARIO–(Marketwired – Sept. 23, 2013) – BlackBerry Limited (NASDAQ:BBRY)(TSX:BB) today announced it has signed a letter of intent agreement (“LOI”) under which a consortium to be led by Fairfax Financial Holdings Limited (“Fairfax”) has offered to acquire the company subject to due diligence.

The letter of intent contemplates a transaction in which BlackBerry shareholders would receive U.S. $9 in cash for each share of BlackBerry share they hold, in a transaction valued at approximately U.S. $4.7 billion. The consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax. Fairfax, which owns approximately 10 percent of BlackBerry’s common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction.

The BlackBerry Board of Directors, acting on the recommendation of a special committee of the board of directors (the “Special Committee”), approved the terms of the LOI under which the consortium, which is seeking financing from BofA Merrill Lynch and BMO Capital Markets, would acquire BlackBerry and take the company private subject to a number of conditions, including due diligence, negotiation and execution of a definitive agreement (the “Definitive Agreement”) and customary regulatory approvals.

The Special Committee, chaired by Director Tim Dattels, was formed in August 2013 to review strategic alternatives for the company. J.P. Morgan and Perella Weinberg are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are acting as legal advisors.

Diligence is expected to be complete by November 4, 2013 (“Diligence Period”). The parties’ intention is to negotiate and execute a definitive transaction agreement by such date. During such period, BlackBerry is permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals (“Alternative Transactions”).

If (A) during the Diligence Period (i) BlackBerry enters into any letter of intent or definitive agreement providing for an Alternative Transaction, (ii) BlackBerry ceases to negotiate with the consortium in good faith with a view to entering into the Definitive Agreement by the end of the Diligence Period, or (iii) an Alternative Transaction is publicly proposed or publicly announced and is consummated within 6 months following the end of the Diligence Period, or (B) during the 3 month period following the end of the Diligence Period, BlackBerry enters into any agreement providing for an Alternative Transaction with a person with whom discussions were held before or during the Diligence Period, then BlackBerry shall pay Fairfax a fee of U.S. $0.30 per BlackBerry share, provided, however, that no such fee shall be payable if the consortium shall have reduced the price offered below U.S. $9.00 per share without the approval of the board of directors of BlackBerry. In the event that a definitive agreement is signed with Fairfax the termination fee will increase to U.S. $ 0.50 per share.

Barbara Stymiest, Chair of BlackBerry’s Board of Directors, said: “The Special Committee is seeking the best available outcome for the Company’s constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”

Prem Watsa, Chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”

In addition to the consortium and its lenders being satisfied with all aspects of the due diligence to be carried out by them during the Diligence Period and the negotiation and execution of a binding definitive agreement approved by the board of BlackBerry, completion of the transaction will be subject to other customary conditions, including receipt of required regulatory approvals. There can be no assurance that due diligence will be satisfactory, that financing will be obtained, that a definitive agreement will be entered into or that the transaction will be consummated.

BDT & Company, LLC, BofA Merrill Lynch and BMO Capital Markets are acting as financial advisors, and Shearman & Sterling LLP and McCarthy Tetrault LLP are acting as legal advisors to Fairfax in connection with the transaction.

7 total comments on this postSubmit your comment!
  1. aha! interesting. Even though i have lost many thousands on the shares, I believe its good that the bleeding ends here. To others it might seem a cheap deal but noone seems to be wanting to step in and take a risk on blackberry. Goodbye BlackBerry!

  2. “while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”

    Ronen do you see this statment as an end to hardware for all or just for non-enterprise customers?

    Also is QNX along for the private ride now too?

  3. This is great news people!

    With the new BlackBerry OS 10, BlackBerry has had time to seriously reflect on the current state of mobile OS’s in the world and then build an interface that is more coherent, efficient, and functional than either iOS or Android.

    Furthermore iOS and Android are not able to offer any radical updates to their interfaces because of both have a large and established app market (with established API) and a large and established clientele.

    BlackBerry 10 users are more satisfied with their phone than any other eco-system. Indeed after 6 months I find that the new BlackBerry OS 10 is so addictive, that I will never go back to my Android (GS3) or iOS (3gs).

    It is only a matter of time before the word spreads, the app selection matures and a critical mass is reached.

  4. I think you are in denial. Do you really see anyone switching en masse to Blackberry from Android or ios? I remember seeing same enthusiasm as yours for BB for Palm OS too but look where it is now. BB will leave consumer market within a year and developers will likely abandon the platform even earlier. The devices are not selling.

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