1. needforbbx's Avatar
    tick tock....

    Deadline looming for BlackBerry offers - FT.com

    When Prem Watsa, chief executive of Fairfax Financial, made a tentative $4.7bn cash offer to take BlackBerry private, he set in motion a countdown that runs out on Monday.

    That is the deadline BlackBerry, the struggling Canadian smartphone maker, set for Mr Watsa to complete his due diligence and make a definitive offer, and for other potential bidders including BlackBerrys founders Mike Lazaridis and Douglas Fregin to step up, or shut up.

    The two men, who are said to be concerned that BlackBerry might be broken up, disclosed their interest in a recent filing with the US Securities and Exchange Commission and hired Goldman Sachs and Centerview to review their options.

    Together they hold an 8 per cent stake in BlackBerry and are said to have funding offers from several separate sources. People close to the two men say that they are yet to decide whether to make a formal offer for BlackBerry, or perhaps team up with Prem Watsa on a joint bid.
    Mr Lazaridis, the technical wizard behind the original BlackBerry handsets, was co-chief executive of the company until the end of February last year when he and Jim Balsillie stepped aside to make way for Thorsten Heins, BlackBerrys existing chief executive.

    People close to the discussions note that even if the Fairfax offer turns into a definitive agreement, the new owners would still need someone to run the company a job Mr Lazaridis might be willing to resume in order to save his baby.

    In the meantime, BlackBerrys share price has remained below the $9-a-share price tentatively offered by Fairfax. This reflects investors doubts about whether the Fairfax deal will be consummated, and whether any other bidders will emerge.

    As part of the tentative agreement between BlackBerry and the Fairfax-led consortium, the latter was given six weeks to conduct due diligence and agreed to a go shop clause under which BlackBerry has been permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals.

    But the break clause in the tentative deal was lopsided. Whereas BlackBerry agreed to pay a break-up fee of at least $160m if a better offer materialised, Fairfax could walk away for free.

    Some analysts including Pierre Ferragu, of Bernstein Research, have expressed doubts about the likelihood of the Fairfax deal closing because Mr Watsa has yet to provide any details of the other members of his consortium, or his funding sources.

    Mr Ferragu told his clients last month that the proposed Fairfax deal was unlikely to close while noting that of the total $4.7bn required in the transaction, Fairfax is not committing any more than it already had when it increased its equity stake last January to about $480m total.
    Mr Watsa, however, says he remains committed to the deal. In an interview with the Associated Press in late September, he emphasised that Fairfax was not in the business of making an offer and then walking away or redoing the deal.

    Weve got a record of 28 years of completing what weve done. Weve never renegotiated, Mr Watsa said. We thought long and hard before we offered $9 a share and were not in the business of offering a number and at the last minute changing the figure. Over 28 years our reputation is stellar on that front. We just dont do that. Mr Watsa has since declined to comment further.

    Nevertheless, since the Fairfax bid was announced there has been a steady stream of speculation about other potential bidders. The companies that have been mentioned include IBM, Microsoft, Samsung, Lenovo, Google, Cisco, SAP, Amazon and most recently Facebook.
    Most have declined to comment on the rumours and speculation, although SAPs finance chief appeared to rule out his company in comments he made 10 days ago. Microsoft, which is acquiring Nokia; Samsung; Lenovo; and Google through its Motorola unit all have existing smartphone operations and could benefit directly from BlackBerrys existing technology.

    Samsung and Lenovo, in particular, could use the new BlackBerry 10 operating system to cut their dependence on the Android operating system supplied by their partner and rival, Google. However, a bid by either company would have to be approved by Canadas government and security agencies, which might object in particular to Lenovo, which is headquartered in China.

    IBM and Cisco have both been mentioned as possible bidders because of their interest in BlackBerrys secure services for business customers, including its new mobile management software that enables corporate IT chiefs to manage not only company BlackBerrys but other manufacturers handsets that employees bring to work.

    We thought long and hard before we offered $9 a share and were not in the business of offering a number and at the last minute changing the figure

    In spite of the rumours, most analysts doubt whether any trade or purely financial buyer such as a hedge fund would be interested in acquiring the whole of BlackBerry, particularly while it is in the midst of such a radical restructuring.
    They do, however, believe that some of the big tech companies mentioned could be interested either in parts of BlackBerry for example its secure private data network and BBM messenger service or in its extensive patent portfolio, which some analysts suggest could be worth between $1bn and $3bn.

    Some potential bidders including Cerberus Capital Management, a private equity group that specialises in acquiring distressed assets, have signed non-disclosure agreements with BlackBerry in order to obtain access to the companys accounts. But so far none have confirmed their interest.

    John Sculley, Apples ex-chief executive, has also been mentioned as a potential bidder along with unnamed Canadian investors, although few insiders give much credence to that suggestion given Mr Sculleys chequered history. Mr Sculley ran Apple for a decade before Steve Jobs returned to the company in 1993 and pushed him out. Mr Sculley himself has declined to comment on reports of his interest.

    One way or another, it should become clear next week whether BlackBerry has a future as an independent handset maker battling for a slice of a global smartphone market that IDC, the market research firm, estimates will grow 40 per cent to more than 1bn units this year, or be broken up and sold.

    BlackBerry still has about $2.6bn in cash reserves, but with the company burning through an estimated $500m in cash per quarter, the clock is ticking.
    11-01-13 11:47 AM
  2. qbnkelt's Avatar
    the waiting is the hardest part....
    11-01-13 11:55 AM
  3. Skatophilia's Avatar
    LOL OP your display pic says it all for this post
    11-01-13 11:57 AM
  4. trwrt's Avatar
    Steve Jobs didn't return to Apple until 1996, and he replaced Gil Amelio, not Sculley. Nice fact-checking FT.
    Eumaeus likes this.
    11-01-13 12:46 PM
  5. peregrineay's Avatar
    If Fairfax doesn't come up with funding, does BlackBerry still need to pay the fee to Fairfax if it get another offer?????? If so, why would BlackBerry have agreed to such a deal???
    11-01-13 11:23 PM
  6. cjcampbell's Avatar
    If Fairfax doesn't come up with funding, does BlackBerry still need to pay the fee to Fairfax if it get another offer?????? If so, why would BlackBerry have agreed to such a deal???
    No... If he backs out, the LOI becomes null and void.
    11-01-13 11:51 PM

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