Winnipeg Free Press - PRINT EDITION
Posted: 09/25/2013 1:00 AM | Comments: 0
TORONTO -- A highly conditional takeover offer put forward by one of BlackBerry's largest shareholders has left several analysts and traders with little confidence it will spark a bidding war for the assets of the beleaguered smartphone company.
Instead, there's a 60 per cent probability investment firm Fairfax Financial and a consortium of financiers will emerge the winners of a US$9-per-share offer that was outlined in a letter of intent earlier this week, said Catharine Sterritt, risk arbitrage strategist at Scotiabank.
"I actually regard this as a quality proposal because it is Fairfax," Sterritt said in an interview Tuesday. "It's not a fly-by-night hedge fund that's just parachuting in a letter. This is someone who genuinely has a business reputation and they have a very large publicly traded company that matters in our marketplace."
The tentative agreement to take BlackBerry private has numerous caveats, which has suggested to some that Fairfax expects the Waterloo, Ont.-based company to carve out a separate deal for all -- or part -- of its operations.
Others have pointed out if somebody wanted to buy BlackBerry, they would have done so during the past year and a half.
"The market is realizing there's no real buyer out there," said Neeraj Monga, an analyst at Veritas Investment Research Corp. "If a financial sponsor (like Fairfax) has to end up buying a technology company, in a case where everybody thought there might be massive value in the intellectual property, this suggests there might not be."
If BlackBerry does find another suitor, Fairfax gets a cushy payout of at least US$157 million as a break fee for its troubles -- and will reap even more money if a deal is etched out after early November, which is when Fairfax is supposed to sign a definitive agreement for the transaction.
Failing that, Fairfax has protected itself in other ways that would allow the firm to rescind its offer if it's not satisfied with due diligence on BlackBerry's finances or doesn't receive the financial backing it needs.
BlackBerry investors appear to be lukewarm on the Fairfax proposal, partly because most of them come out as financial losers regardless of the outcome. The $9-per-share offer for the company is a tiny fraction of the value many small investors bought into the stock. BlackBerry shares touched their all-time high of C$149.90 in June 2008.
On Tuesday, shares of the company fell to $8.78, a decline of 3.3 per cent on the Toronto Stock Exchange, and below the tentative Fairfax proposal.
Prem Watsa, the head of Fairfax, emphasized the Canadian roots of the as yet unidentified consortium, which he says offers a "high level of certainty" regulators will approve the proposal
Canadian pension plans are some of the likeliest partners in this agreement, although none of them has confirmed their involvement.
The secret consortium is expected to complete its due diligence by Nov. 4.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition September 25, 2013 B4
Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.
Having problems with the form?Contact Us Directly
Swiss bank UBS loses $1.4B bail appeal in France
US stocks fall as China weighs on markets
BlackBerry prices lower than competitors
Judge maintains camera restrictions in Arias trial
Sousa uses $1-billion reserve to cut deficit
Loonie falls ahead of speech by BoC
Apple: 10 million iPhone 6 and 6 Plus sold
GM expert says 21 deaths eligible for compensation
US existing home sales fall in August
Giuliani to help fight Noriega's video game suit
TV reporter quits on air to promote marijuana
Plosser, a leading Fed 'hawk,' to retire in March
Draghi: Euro recovery losing momentum
Tesco suspends execs over inflated profit report
Engineers call for national approach to flooding
Metals and gold push the TSX lower
'The Lion King' earns record box office
Eritrean eats go downtown
Target eyes shortcomings in Canada
US stocks drop as China weighs on markets