Blackberry Provisionally Sold To Shareholder Led Consortium

Just hours after announcing its terrible financial statement Blackberry has released the news that it has accepted an offer backed by Fairfax and led by its biggest shareholder, to take the company into private ownership. The deal is for a reported US$4.7bn. During the Due-diligence phase Blackberry is able to consider any alternative offers.

Where does this leave Blackberry - and what makes Fairfax think that its dollars are wisely invested in the troubled company?

Firstly I suspect that this news may result in the end of Blackberry as a handset manufacturer. Its fallen market share is so badly damaged that without Microsoft levels of investment its unlikely to ever recover. The new owners will almost certainly scale back or entirely kill the handset line. Which leaves the company with its Enterprise server business and Messenger products. The former are all but redundant. The latter faces a perfect storm of competition.

In this position its unlikely that $4.7bn is ever going to be recovered in profit.

For Blackberry this deal doesn't strike me as the life-saver it required, investment for new products and development doesn't seem like a given with the potential new owners and as a result, miraculous turnaround notwithstanding, I see this as only delaying the inevitable collapse.

Still at $9 a share, at least current shareholders got to take some value out of the company. Which may be more than the new owners can ever achieve...

0 comments: