Last minute offer could trounce Prem Watsa
The battle for BlackBerry looks set to go the wire with just two days left before its board has decide whether to go with the $4.7 billion cash offer from major stakeholder Prem Watsa, or accept a rival bid – assuming there’s one on the table. Co-founders Mike Lazaridis and Doug Fregin (who’ve already hinted they’d be interested) were last night [1st November 2013] reported to be forming their own consortium in which Cerberus Capital Management and US chip maker Qualcomm are included. If successful, it could resolve the doubts about the future of the company given that Watsa has yet to say where his support is coming from.
Much could hinge on Monday’s deadline [4th November 2013], with the Cerberus-backed team holding back to see if Watsa’s bid definitely materialises and, if so, on what terms.
Qualcomm already supplies the chips for BlackBerry devices and with its muscle behind them, Lazaridis and Fregin – who together still own about 8 per cent of BlackBerry – would have little problem raising funds.*
Lazaridis, the technical genius behind the original BlackBerry handsets, was co-chief executive until the end of February last year when he and Jim Balsillie stepped aside to make way for Thorsten Heins, who had been COO.
But it is under Heins that the troubled Canadian manufacturer has since gone from bad to worse, with its market cap falling from a peak of $78.2 billion in its heyday to just $4 billion now.
Meanwhile BlackBerry’s share price has further dwindled, closing last night at $7.77 – significantly less than the $9 per share Watsa is purportedly offering.
The sting in the tail for BlackBerry’s board, however, is that if they find a better offer they’re obliged to pay Watsa a break-off fee of at least $160 million, whereas if his own consortium Fairfax Holdings declines to continue he pays nothing.
Other potential bidders still include IBM, Microsoft, Samsung, Lenovo, Google, Cisco, SAP, Amazon and Facebook, but if they are to show their hand it will need to be soon – the clock is ticking.
*Footnote: Indeed Qualcomm knows a lot about raising money. It has Qualcomm Ventures is the investment arm of Qualcomm Inc. – Ed.