NEW YORK (
(BBRY - Get Report)
founder and former co-CEO Mike Lazaridis is weighing a takeover of the struggling smartphone pioneer and has hired
to advise on any strategic transactions.
BlackBerry is considering strategic options such as a sale of the company in the wake of a disastrous second-quarter earnings report, which fell far short of Wall Street consensus and included a $1 billion inventory writedown related to its Z10 smartphone. The Waterloo, Ontario-based company also said it would lay off 40% of its workforce in a realignment of its business away from the consumer smartphone market.
Lazaridis' emergence as a possible bidder on BlackBerry, either individually or with a strategic consortium, indicates that the smartphone maker's sale process is heating up. In September, BlackBerry's largest shareholder
said it intended to buy the company
at $9 a share, subject to due diligence and financing arrangements from a syndicate of U.S. and Canadian lenders.
Now, it appears BlackBerry's two largest shareholders are both interested in some type of strategic deal. Lazaridis' intent is spelled out in a
Securities and Exchange Commission
. Filings as of June 30 show Fairfax Financial owns 9.89% of BlackBerry's outstanding shares.
Lazaridis said he would consider increasing his stake in BlackBerry as high as a full takeover of the company. He also said in the Thursday filing that he could submit indications of interest for BlackBerry, engage the company's board or even submit a formal offer to a Special Committee running the sale process.
While Lazaridis said he could discuss potential transactions such as a joint bid or proposal for asset sales with other BlackBerry shareholders or market participants, no mention of a transaction was made in the filing. Lazaridis also has the ability to sell his shares.
"[There] can be no assurance that the Reporting Persons will take any of the actions set forth above," the filing states.
Lazaridis will work with Douglas E. Fregin, a co-founder and former BlackBerry vice president on any potential bid. Fregin also holds a significant investment in Blackberry shares.
Whether Lazaridis and Fregin come up with a proposal for BlackBerry remains unclear. It also isn't clear if Fairfax will submit a formal offer for BlackBerry, or at what price.
Fairfax's intent to buy BlackBerry for $4.7 billion is subject to receiving financing commitments from
Bank of America Merrill Lynch
BMO Capital Markets
and the firm's own due diligence. Fairfax's founder and CEO, Prem Watsa, was previously a board member at BlackBerry so it is unclear how a due diligence process would uncover any new financial insight.
In mid-September, BlackBerry announced a major restructuring that will cut the company's workforce
were also taken by some analysts as the biggest-ever miss in the tech sector.
BlackBerry's second-quarter revenue came in at $1.6 billion, or about half of consensus Wall Street estimates. Of that revenue, 50% is expected to come from BlackBerry's various IT and security services. Meanwhile, the company recorded an inventory writedown of about $1 billion as a result of a glut of unsold BlackBerry Z10 handsets.
It is unclear whether BlackBerry can truly re-focus on the enterprise market as it said it in its planned workforce restructuring. BlackBerry's security and services offering does win praise from business professionals, however, without a commitment to the company's handset business it is unclear whether those users would flee to other networks.
BlackBerry shares reversed early losses in Thursday trading and were higher by nearly 1% at $8.18. Shares have lost ground since Fairfax's informal proposal and remain well below the investment manager's $9 a share price.
-- Written by Antoine Gara in New York.