BlackBerry sold to biggest shareholder for $4.7bn

BlackBerry has agreed a deal that will see it sold to a consortium led by its largest shareholder for $4.7 billion. Picture: Robert Perry

The Canadian firm said it had signed a “letter of intent agreement” with Fairfax Financial – which owns almost 10 per cent of BlackBerry shares – over a $9 per share cash deal.

It comes days after BlackBerry, which was one of the pioneers of the smartphone industry but has since been overhauled by its rivals, particularly Apple’s iPhone, revealed it expected to make a loss of $1bn after disastrous sales of its new handsets, and would lay off 4,500 staff.

Canadian billionaire investor Prem Watsa, Fairfax’s chairman and chief executive, 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.”

Shares of in the Nasdaq-listed company, which plunged after Friday’s announcement it was shedding 4,500 jobs, rose 1.3 per cent to $8.85 after initial rumours of the bid, although trading in BlackBerry was suspended ahead of the announcement.

Watsa has been compared to Warren Buffett because of his investing approach.

BlackBerry founder Mike Lazaridis recruited him to join the company’s board when Lazaridis and Jim Balsillie stepped aside as co-chief executives in January last year.

BlackBerry said its board of directors approved the terms of the letter of intent. The statement said BlackBerry and Fairfax will negotiate and execute a definitive transaction agreement by 4 November.

Watsa said in April that he was a “big supporter” of current chief executive Thorsten Heins and called his promotion the right decision in 2012. He also said he was excited about the company’s new BlackBerry 10 operating system.

BlackBerry, formerly known as RIM, was once Canada’s most valuable company with a market value of $83bn in June 2008, but the stock has plummeted from over $140 share to less than $9, at one point falling as low as $6.22.

This year’s launch of BlackBerry 10, its revamped operating system, and fancier devices – the touchscreen Z10 and Q10 for keyboard loyalists – was supposed to rejuvenate the brand and lure customers. But the much-delayed phones have failed to turn the company around. A new phone, the touchscreen Z30, was unveiled last week.

They were designed to see it catch up with Apple, Samsung and other smartphone makers after falling behind in terms of new technology after the launch of the iPhone in 2007.

At their peak in autumn 2009, BlackBerry’s smartphones enjoyed global market share of over 20 per cent, said Mike Walkley, an analyst with Canaccord Genuity. Their piece of the pie has since evaporated to just 1.5 per cent.

BlackBerry said last week it will lay off 4,500 employees, or 40 per cent of its global workforce, as it tries to slash costs by 50 per cent and shift its focus back to competing mainly for business customers.

BlackBerry said cutting its global headcount to 7,000 total employees is necessary. The company let 5,000 people go last year.

BlackBerry, which started in 1999, is known for the loyalty of its users, who include Barack Obama.