BlackBerry Buyer To Take Company Private

BlackBerry, the struggling smartphone maker, has a tentative buyer.

Fairfax Financial, an insurance firm and BlackBerry’s largest shareholder, wants to take the company private in a $4.7 billion deal. Based on a letter of intent, Fairfax would pay BlackBerry shareholders $9 per share if the deal goes through. CNN deemed that “an extremely low premium for a once-dominant company.”

Fairfax already owns about 10 percent of BlackBerry. Fairfax Chairman and CEO Prem Watsa — who has had success in turning around some distressed businesses — resigned from BlackBerry’s Board of Directors in August to avoid the possibility of any conflict of interest when the company considered putting itself up for sale.

BlackBerry has lost significant market share, reportedly shrinking from 51 percent to 34 percent in North America in the past four years: “BlackBerry… once dominated the market for secure on-your-hip email. But it introduced consumer-friendly touchscreen smartphones only after it lost the lead to Apple Inc’s iPhone and devices using Google Inc’s Android operating system,” Reuters observes.

On Friday, BlackBerry announced it would lay off about 4,500 employees, amounting to about 40 percent of its global workforce and also disclosed it expected to have $1 billion loss in the quarter.

Reuters notes that the transaction won’t be a done deal for about six weeks. “BlackBerry has until November 4 to seek superior offers, which the Fairfax group has the right to match.”

An analyst cited by the New York Times claims that investors really have no interest in BlackBerry’s smartphone business. “There is no value for the BlackBerry 10 ecosystem.The value of this company is cash and patents.”

CNN explains that the much-delayed BlackBerry 10 operating system fell way short of expectations. “BlackBerry 10 finally launched in January, but sales of the new phones running on the platform have sorely disappointed.”

BlackBerry also announced on Friday that it was exiting the consumer market and will focus on its corporate customers.