Monday deadline approaches for bids for BlackBerry
Rival bids to the $4.7 billion offer from company’s largest shareholder, Fairfax Financial Holdings, due Monday
Once pride of Canada, BlackBerry has until Monday to receive rival bids, or else accept the $4.7 billion offer from its largest shareholder, Fairfax Financial Holdings Ltd. The auction process, which a Canadian pension fund called “the most bizarre sales process I’ve seen in a long time,” could involve the break-up of the company.
Rumors are swirling about who, exactly, could be interested in the cellphone maker. In the back of a lot of people’s minds is the acquisition of Motorola Mobility by Google, which was really about patents, and didn’t turn out so well, in any case.
BlackBerry co-founders Mike Lazaridis and Doug Fregin are supposedly in talks with the buyout firm Cerberus Capital Management LP and semiconductor maker Qualcomm Inc., in their efforts to take over the company.
Meanwhile, there are reports that Faixfax Holdings is having a hard time coming up with the money to support their bid, with Reuters saying that “several large banks” have declined to fund the effort.
Last week the WSJ reported that BlackBerry officials had flown to California to meet with Facebook about a possible bid. The appearances of the meeting, with the seller flying to meet with the potential buyer, were not good – at least if you’ve ever been involved with M&A. Generally, the buyer is supposed to pursue the seller, examining their black book, then making their inquiries. There is no rule against the seller doing the traveling, but it pretty much shows the desperation of the seller when they do. (That is why road shows for IPOs involve the company execs traveling, but after that they do conference calls and entertain investors at their offices.)
BlackBerry stock closed at $7.77 on Friday, quite a bit lower than the $9 a share bid from Fairfax. That makes that an attractive bid, assuming they can raise the capital. But if Fairfax can’t raise the money, rival bids may come in much lower – in fact, rival bidders may the betting against Fairfax in any auction bid.
It is possible that, in order to make a sale possible, that the company could be broken up.
“We were looking at the individual assets because that’s how you understand the whole company,” Alberta Investment Management Corp. Chief Executive Officer Leo de Bever told Bloomberg last month. “But it doesn’t necessarily mean that we want to take a carving knife to BlackBerry. The odds are that’s what’s probably going to happen.”