BlackBerry receives offer valuing it at US$4.7 billion

BlackBerry’s largest single shareholder, Fairfax Financial Holdings has made an offer to buy the company and take it private in a deal that values the smartphone manufacturer at just US$4.7 billion – a far cry from its peak in 2009 when the company was worth US$84 billion.

BlackBerry confirmed that it has signed a letter of intent agreement under which a consortium to be led by Fairfax has offered to acquire the company – subject to due diligence.

The BlackBerry directors are recommending the offer.

The consortium is offering US$9 per share to buy the company – a premium on the share price earlier today, but below the average of US$10.60 per share the company was trading at before it announced last week’s billion dollar loss and 4,500 redundancies.

At the end of the second quarter, BlackBerry had around US$2.6 billion in cash and equivalents in the bank – so the net cost to the buyers of the company comes in at just US$2.1 billion.

Fairfax, which owns approximately 10 per cent of BlackBerry’s shares, intends to contribute its stake into the transaction.

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."

The due diligence on the company is expected to be completed in early November, and the company is free to seek out competing offers from other buyers. Considering the patent pool owned by the company, and its large BBM consumer base, other handset and service providers may be keen to launch a hostile counter bid.