BlackBerry bites the bullet with US$4.7bn private deal

BlackBerry, reeling from a string of poor smartphone sales, has entered an acquisition agreement worth US$4.7bn with a private equity consortium led by Toronto-based Fairfax Financial.

The struggling Canadian smartphone maker's decision to go private follows a warning that the company could lose nearly US$1bn during the next quarter.

Announcing job cuts of up to 4,500 earlier this week, many analysts claim BlackBerry's business has simply "sailed off a cliff."

The embattled company, forever battling to stay afloat, announced the measures after a string of new devices failed to capture the public’s imagination.

“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," says Prem Watsa, Chairman and CEO, Fairfax.

"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 letter of intent contemplates a transaction in which BlackBerry shareholders would receive US$9 in cash for each share of BlackBerry share they hold, in a transaction valued at approximately US$4.7bn.

According to the agreement, the consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax.

Fairfax, which owns approximately 10 percent of BlackBerry’s common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction.

Diligence is expected to be complete by November 4, 2013 (“Diligence Period”), with the parties’ intention to negotiate and execute a definitive transaction agreement by such date.

“The Special Committee is seeking the best available outcome for the Company's constituents, including for shareholders," says Barbara Stymiest, Chair of BlackBerry’s Board of Directors.

"Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”

Is this the right move for BlackBerry? Was the company left with any other alternative? Tell us your thoughts below