Fairfax-led consortium offers to buyout BlackBerry for $4.7B

Hyderabad-born Prem Watsa-led Canadian financial services firm Fairfax Financial Holdings Ltd (Fairfax) is leading a consortium of investors who have offered to take the mobile handset maker BlackBerry private in a $4.7 billion transaction. Fairfax currently owns 10 per cent of BlackBerry.

BlackBerry said on Monday it has signed a letter of intent agreement (LOI) under which a consortium of investors led by Fairfax may buy the Canadian smartphone maker for $4.7 billion.

According to the agreement, BlackBerry shareholders would receive $9 in cash for each existing share of BlackBerry they currently hold. The consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax. Fairfax, which owns approximately 10 per cent of BlackBerry's common shares, intends to contribute the shares it currently holds into the transaction.

NASDAQ-listed BlackBerry ended at $8.82 a share after the announcement on Monday.

The BlackBerry board, acting on the recommendation of a special committee of the board of directors, has approved the terms of the LOI under which the consortium, which is seeking financing from BofA Merrill Lynch and BMO Capital Markets, would acquire BlackBerry and take the company private subject to a number of conditions, including due diligence, negotiation and execution of a definitive agreement and customary regulatory approvals.

The special board committee, chaired by director Tim Dattels, was formed in August 2013 to review strategic alternatives for the company. JP Morgan and Perella Weinberg are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are acting as legal advisors.

Diligence is expected to be completed by November 4, 2013. The parties' intention is to negotiate and execute a definitive transaction agreement by such date. During such period, BlackBerry is permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals, the release said.

Prem Watsa, chairman and CEO of Fairfax, 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."

BDT & Company, LLC, BofA Merrill Lynch and BMO Capital Markets are acting as financial advisors, and Shearman & Sterling LLP and McCarthy Tetrault LLP are acting as legal advisors to Fairfax in connection with the transaction.

(Edited by Joby Puthuparampil Johnson)