This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: Fairfax Drops $4.7B BlackBerry Bid

Stocks in this article: BBRY

NEW YORK (The Deal) -- BlackBerry  (BBRY - Get Report) is hitting reboot once again, with the troubled phone maker Monday, Nov. 4, abandoning plans to sell itself and sacking its CEO after major shareholder Fairfax Financial Holdings walked away from a proposed $4.7 billion buyout.

Waterloo, Ont.-based BlackBerry said Fairfax instead would invest $250 million in a $1 billion convertible debentures sale. Fairfax in September had agreed to a tentative deal to buy the company but had until end of business Monday to secure financing for the purchase and make a definitive offer.

BlackBerry said it has concluded a review of strategic alternatives first announced in August, and would instead go it alone with a new management team.

Upon closing of the bond sale, CEO Thorsten Heins will step down and one-time Sybase CEO John Chen will be named executive chairman of the board. Fairfax CEO Prem Watsa, who stepped down from the board last summer ahead of his firm's bid for BlackBerry, will rejoin the group and serve as lead director.

Chen will also serve as interim CEO. The convertible bond sale is priced at $10 per common share, a premium of 28.7% to BlackBerry's Nov. 1 close, and if fully converted would represent about 16% of the company's common shares.

The reshuffling continues a long downward spiral at BlackBerry, a one-time high flier which has lost more than 80% of its value since the beginning of 2011 as its smartphones have been outmuscled by offerings from Appleand products running Google's Android operating system.

Shares of BlackBerry opened down more than 16% Monday morning.

But BlackBerry chairwoman Barbara Stymiest in a statement called the Monday announcement "a significant vote of confidence" in the company.

"The BlackBerry board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders," Stymiest said. "This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position."

JPMorgan Securities, Perella Weinberg Partners and RBC Capital Markets are serving as financial advisers to BlackBerry, with Skadden, Arps, Slate, Meagher & Flom, Torys and Blake, Cassels & Graydon providing legal advice.

Fairfax was advised by BDT & Co., Bank of America Merrill Lynch and BMO Capital Markets , Shearman & Sterling and McCarthy Tetrault, with BMO also acting as the sole bookrunner for the private placement.

Written by Lou Whiteman.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,407.50 +20.29 0.12%
S&P 500 2,032.36 +2.81 0.14%
NASDAQ 4,707.50 +26.0030 0.56%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs