[needforbbx]

Fairfax in the home stretch on BlackBerry acquisition, right?

Posted: 24 Oct 2013 07:23 AM PDT

There are just eleven days to go before the expiry of Fairfax Financials (FFH:TSX) due diligence window on their previously-announced all cash $9/share acquisition of BlackBerry (BBB:TSX, BBRY:Q). Mr. Market would normally expect the formal takeover bid to be tabled by the end of that period, although BlackBerrys current share price is about 6% below the Fairfax bid price; weaker than you might expect at this late stage.

Under the terms of Fairfaxs letter of intent, theres nothing preventing the Blackberry Board from extending the due dili window, but one assumes thats something theyd hate to do. Surely, the BlackBerry board is primarily focussed on executing a Definitive Agreement with Fairfax at $9.00 as proposed and the sooner they get that deal consummated, the sooner the companys enterprise customer base will breathe a sigh of relief and restart the process of upgrading to the Q10.

I dont want to fuss too much, but despite a variety of BlackBerry deal leaks over the past two weeks, none of them have been about Fairfax making progress on securing the $4.3 billion in debt and equity financing it needs to close its $4.7 billion acquisition. Not since Bloomberg found a talkative Leo de Bever, CEO of Alberta Investment Management Corp., anyway (see prior post Confusion reigns over BlackBerry M&A process Oct. 10-13). As I said to BNNs Catherine Murray that day, this wasnt a good sign.

Since then weve read pretty detailed stories about Cerberus (see prior post As BlackBerry shares swoon, a different kind of buyer emerges), Cisco (later dismissed by Fortunes Dan Primack), Mike Lazaridis and Doug Fregin (see BNN interview on the topic), Lenovo (see BNN interview on the topic), and now even former Apple CEO John Scully. On the Scully item, this from todays Globe and Mail:

John Sculley, the former Apple Inc. CEO who famously clashed with Steve Jobs, is exploring a bid for beleaguered BlackBerry Ltd. with Canadian partners, sources have told The Globe and Mail.

Although he said he couldnt comment to the Globe regarding the leak about his interest, he provided some grist for the mill just the same:

The only thing I would say is, I think theres a lot of future value in Blackberry, Mr. Sculley said, but without experienced people who have run this type of business, and without a strategic plan, it would be really challenging Whoever buys it would have to have a strategic plan that was credible and could succeed, and they would want to have an experienced team that would be able to implement that plan.

Although the coverage to date has not made any linkage, it may well be that Mr. Sculley is actually part of the Fairfax bidding group. Im not sure why that wouldnt be part of the leak that was provided to the Globe yesterday, but it isnt inconceivable. Well known to be a BlackBerry user, Mr. Sculley has previously stated that BlackBerry should get out of the handset business (H/T TweakTown):

In an interview with Bloomberg, the former CEO said that BlackBerry is at the point where it can still turn around, but it must stop building hardware. Sculley said that BlackBerry can come back if they drop hardware and focus on secure messaging, although he also cautioned that the clock is running out on the company.

We are clear that Andr Bourbonnais, SVP of Private Investments at CPP Investment Board, has stated that a strategic player would have to be part of any go-forward BlackBerry plan for his team to be involved, and perhaps Mr. Sculley fits that bill. However, if Mr. Sculley is truly leading his own bidding group, by my count, he would represent the third different group currently in the debt and private equity market in the hopes of securing more than $4 billion of financing, along with Team Mike and Team Fairfax.

That Mr. Sculleys name is coming out only now, when JPMorgan and RBC Capital Markets were engaged back in May 2012 to review BlackBerrys strategic alternatives, doesnt necessarily undermine the prospect that he may actually pull together a firm bid before Christmas. But, since Fairfax has to firm up by November 4th, Sculley et al dont have time to accomplish much.

Fairfax CEO Prem Watsa told the Globe and Mail last month that he had no doubt that the financing will be secured. With just eleven days to go before their due dili window expires, Fairfax must be in the home stretch. Right?

Wellington Financial Blog – News, Views & Purviews - Fairfax in the home stretch on BlackBerry acquisition, right?

[Shanerredflag]

I feel the very positive launch of BBMX is going to sully the waters on FF...will know shortly (no pun intended).

Posted via CB10

[oilgeo10]

Hmm, if I was an enterprise customer I would still be on the fence if the Fairfax offer goes through as who would be running the company? They shouldn't be keeping any of current board or BB sr management executives and Watsa isn't qualified, unless chopping it up.

Posted via CB10

[kfh227]

To reiterate what Prem has said.

The offer is not some sort of bluff to get a bidding war started.

And

He is not breaking the company up.

Posted via CB10

[fin2007]

To reiterate what Prem has said.

The offer is not some sort of bluff to get a bidding war started.

And

He is not breaking the company up.

Posted via CB10

He does not know anything about mobile industry, how can he turn this company around?

[kevinnugent]

He does not know anything about mobile industry, how can he turn this company around?

He can't, and he won't. There's now 5 working days before his due diligence period is up and he hasn't annouce financing yet. If he had it, and wanted to scare off potentially higher offers he would have announce his success in gaining it.

The whole Sculley thing is just ridiculous. There's a very good article on BGR (yeah, I know, I know) about "The guy who just about ran Apple into the ground" putting together a bid.

Anyway, this whole thing is bizarre. Whatever happens come Nov 4 I won't be surprised.

[birdman_38]

A low ball bid by an insurance company and a guy fired by Steve Jobs kicking tires.

Yeah...

[kfh227]

He does not know anything about mobile industry, how can he turn this company around?

By doing what blackberry is doing. Be a niche player in enterprise.

And Prem is not running blackberry. He is allocating capital that fairfax has to buy it. Then probably making sure that the right people are running the show.



Posted via CB10

[cgk]

By doing what blackberry is doing. Be a niche player in enterprise.

And Prem is not running blackberry. He is allocating capital that fairfax has to buy it. Then probably making sure that the right people are running the show.



Posted via CB10

You make it sound like that was the plan? I agree it can can be a niche services company and BBM is a good candidate for a spinoff but this isn't a result of careful planning, it's due to inept management.

It's like the old gag "how do you make a small fortune in football? Start with a large one..."

[fin2007]

By doing what blackberry is doing. Be a niche player in enterprise.

And Prem is not running blackberry. He is allocating capital that fairfax has to buy it. Then probably making sure that the right people are running the show.



Posted via CB10

By doing what bb is doing? LOL. It has already proved that what bb is doing is a BIG FAILURE and could not success.

You will lose lots of money if you could not sell 5M+ phone units per quarter, it is a volume business. And if BBRY can only sell <5M phones per quarter, then there is no reason for BBRY to hold its patents any way.

You need new plan.

[EchoTango]

Let's all hope the Fairfax bid does go down the drain....were it belongs !

I can fully appreciate non-shareholders wanting this all to be over with however, you would have a very differnt view if you had a substantial investment on the line. Some of the shareholder bought in at over $60 when things we looking like BBerry was going to be a serious contender and watched as their investment dwindled to almost nothing. The Fairfax bid garrantees and locks-in a substatial loss without ANY chance of recovery. Given the early days of BB10, these investors will have no chance to participate in the future value appreciation should BB10 prove out to be the success we all know it can be.

In my view the Fairfax offer is a stocking-horse bid but, just might squeek through if the BOD is in Prem's pocket.

[StickyRice]

Fairfax stock spiked today, who knows.
Sculley is going on CNBC Monday morning @ 11:00am EST

Next week will be interesting.

@ a minimum there will be short covering and speculation which will drive the price up toward $9.00