Two of the founders of struggling smartphone manufacturer BlackBerry are considering a bid for the company, they said in an SEC filing.
Mike Lazardis and Doug Fregin – who together own 8% of BlackBerry’s stock – have hired Goldman Sachs and…
Two of the founders of struggling smartphone manufacturer BlackBerry are considering a bid for the company, they said in an SEC filing.
Mike Lazardis and Doug Fregin – who together own 8% of BlackBerry’s stock – have hired Goldman Sachs and Centerview Partners as they assess the possibility of making a move for the Canadian company, which is currently under offer from a consortium led by Fairfax Financial Holdings.
BlackBerry and Fairfax – its largest shareholder – agreed a US$4.7bn deal in September but, under the terms of the deal, BlackBerry is free to negotiate with other bidders.
Should the co-founders come in for BlackBerry now, Fairfax would be entitled to a termination fee of roughly US$157m, depending on the smartphone maker’s share price. If Fairfax and BlackBerry formalise a deal and the founders then come and trump the investment firm, Fairfax would receive around US$262m.
The offer from Fairfax is far from cut and dried. It is reliant on the investor securing financing from BofA Merrill Lynch and BMO Capital Markets, and finding equity partners. Fairfax itself is not planning on putting any new capital into BlackBerry.
Fairfax’s bid is also subject to due diligence, which has until 4 November to complete. The 10%-shareholder could lower its offer or pull out altogether.
Analysts have agreed that the target is very difficult to value and are sceptical of the bid, given the doubts around financing. Some have suggested Fairfax’s offer is simply a way to smoke out rival bidders.
Following Fairfax’s US$9 per share proposal, BlackBerry’s stock has traded around the US$8 mark, reflecting the scepticism around the offer.
Since the firm placed its offer, Cerberus Capital Management has been said to want to sign a confidentiality agreement to get access to BlackBerry’s books, and at least one other distressed-investing firm has taken an interest.
Cisco Systems, Google and SAP are also reported to be in talks with BlackBerry to buy either the whole of the business or particular divisions. The tech companies are said to be particularly interested in BlackBerry’s patent portfolio and secure server network.
