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BlackBerry signs letter of intent to be sold in $4.7-billion deal

September 23, 2013|By Andrea Chang
  • BlackBerry Chief Executive Thorsten Heins displays the BlackBerry 10 smartphone at an event in New York in January. BlackBerry has signed a letter of intent to be bought by a consortium led by Fairfax Financial Holdings Limited.
BlackBerry Chief Executive Thorsten Heins displays the BlackBerry 10… (Mario Tama / Getty Images )

BlackBerry is getting a much-needed lifeline, announcing Monday that it had struck a deal to be bought for $4.7 billion.

The Canadian smartphone maker said it had signed a letter of intent with a consortium led by Fairfax Financial Holdings Limited, which will take the smartphone maker private. 

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"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," Prem Watsa, chairman and chief executive of Fairfax, said in a statement. "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."

Under the terms of the tentative deal, BlackBerry shareholders would receive $9 in cash for each share they hold. 

Fairfax owns about 10% of BlackBerry's common shares and plans to contribute those shares into the transaction, BlackBerry said.

BlackBerry's board of directors has approved the terms subject to "a number of conditions," including due diligence, negotiation and execution of a definitive agreement, and customary regulatory approvals.

Diligence is expected to be completed by Nov. 4, and the companies' intention is to negotiate and execute a definitive transaction agreement by then.

In the interim, BlackBerry is "permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals," the company said, meaning a higher bid from a different potential buyer could emerge.

"The special committee is seeking the best available outcome for the company's constituents, including for shareholders," said 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."

Tech analysts have long said the company's days as a public stand-alone company are numbered.

Its new smartphones running the revamped BlackBerry 10 operating system aren’t selling well. On Friday, the company said it planned to lay off about 4,500 employees, or about 40% of its workforce. It also said it lost nearly $1 billion in its most recent quarter.

Last month, BlackBerry announced that it had formed a special committee to weigh strategic alternatives, including putting itself up for sale.

The five-member special committee, which includes Chief Executive Thorsten Heins, said in a statement that options included "possible joint ventures, strategic partnerships or alliances, a sale of the company or other possible transactions."

Fairfax is a financial services holding company based in Toronto.

Shares of BlackBerry were up 1.3%, or 11 cents, to $8.84 at 11:15 a.m. Pacific time.

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