BlackBerry, a struggling Canadian Smartphone maker agreed to be bought by a leading firm FairFax Finance at the whopping price of $4.7 billion on Monday. BlackBerry said that FairFax, one of its biggest stakeholders with about 10% of the stock, had shown its interest to buy the Smartphone giant at the base rate of $9 per share in cash! However, the BlackBerry also made it clear that they will keep making efforts to explore other available options while the negotiation is continued with FairFax Financial.
Just before a weekend on last Friday, BlackBerry has announced 4500 jobs cut in a bid to recover server losses in the business. If we believe in the company reports, the Canadian Smartphone maker has also mentioned that the company is expected to face severe losses, up to $1 billion, as its recently launched products fail to make a remarkable presence in the market. According to the company, its recently launched handsets have performed poorly in the market. Moreover, earlier in the August month, BlackBerry was evaluating a possible sale.
However, on Monday, the company unveiled that they’ve signed a letter of intent agreement under which an association will be led by FairFax Financial Holdings Limited has offered to buy the company subject to due diligence. The company further added that the diligence is going to complete by November first week in the current year. The intention of both the parties is to negotiate and execute a definitive transaction agreement by such date.
Prem Watsa, a Canadian billionaire and a chairman and CEO of FairFax said that they firmly believe that this financial transaction will open the new doors of opportunities for the BlackBerry, its customers, carriers as well as the employees working for it. He further added that they have ability to deliver immediate value to the shareholders while continue the execution of a long-term strategy in a private firm with the focus on delivering high quality and secure enterprise-level solutions to the BlackBerry customers across the globe.
However, with the release of this news, BlackBerry stocks down almost 6% on Wednesday as the investors weighed the faith from the Smartphone giant due to recent takeover offer from the FairFax Financial, which is one of the biggest shareholders of BlackBerry. The company has already pulled back more than 52 cents to close at $8.26 on the Toronto Stock Exchange, stretching a downwards shift gained a mere boost earlier this week.
BlackBerry is losing faith and confidence of the investors…
The recent share pullback indicates that BlackBerry investors are losing faith due to recent deal taken place among the BlackBerry and FairFax Financial. A recent report from the Globe and Mail indicates that FairFax is seeking more than $1 billion from the other investor to help fund a takeover of BlackBerry, but the Toronot-based firm has a long way to go before it gains the support it seeks!
What’s your take on this? Do you think the recent acquisition from FairFax would affect BlackBerry application development? Share your views in the comments…!