Canadian smartphone maker BlackBerry has agreed to a US$4.7bn takeover bid from a consortium led by its biggest shareholder, Fairfax Financial.
In a statement released today, the company has signed a letter of intent agreement under which a consortium being put together by Fairfax Financial Holdings Limited has offered to acquire the company, subject to due diligence.
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Fairfax holds a 9.9 per cent stake in BlackBerry, which it will roll into the consortium, should its bid be successful.
The consortium plans to acquire all the outstanding shares of BlackBerry, not held by Fairfax, in an all-cash deal
The letter of intent submitted by the consortium has been approved by the special committee set up by the company to adjudicate bids after it effectively put itself up for sale in August. The consortium is seeking financial support from Bank of America Merrill Lynch and BMO Capital Markets in order to complete the deal.
The US$9 per share bid was tabled after a profits warning by the company that indicated that the company is heading for a $1bn quarterly loss after sales of its smartphones fell by half over the summer, selling just 3.7 million units of both its old-style BlackBerry 7 devices and its newer BlackBerry 10 smartphones.
According to reports, the channel is glutted with BlackBerry 10 series devices that have remained unsold. On Friday, the company said that it would cut approximately 40 per cent of its workforce - some 4,500 staff - in response in a bid to cut costs and staunch the losses.
The bid may be viewed with chagrin by investors. As recently as June 2008, the company was valued at around $80bn as its market share peaked - before Apple's iOS took off, and Google's Android operating system became popular.
