OTTAWA: BlackBerry announced Monday it has agreed to a $4.7 billion buyout by a consortium of investors who plan to take the struggling Canadian smartphone maker private.
The company said in a statement that it has "signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings Limited has offered to acquire the company subject to due diligence."
Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry's largest shareholder with approximately 10 percent of its shares. Watsa resigned from BlackBerry's board when it announced in August its intentions to search for a suitor.
Under the proposed deal the consortium would offer $9 for each outstanding share, and Fairfax would contribute its own shares in the transaction.
BlackBerry said its board of directors support the plan.
A firm deal, once due diligence is completed, is expected to be announced by November 4. It hinges also on the consortium obtaining financing.
BlackBerry said it would continue a search for a possibly better suitor in the interim.
BlackBerry stock was down six percent to $8.23 before trading was halted just prior to its announcement. Its shares climbed back up to $9.07 in afternoon trading.
Analysts meanwhile reacted with measured optimism.
"This is probably the best possible outcome of several unattractive options for BlackBerry," said analyst Jack Gold of J. Gold Associates.
While BlackBerry helped create a culture of mobile users who were glued to the company's smartphones, many of those customers have since moved to Apple iPhones or other device makers such as Samsung, mainly using Android.
According to International Data Corporation (IDC), BlackBerry's global market share had slipped to 3.7 percent in the second quarter, the lowest since tracking began, while Android accounted for nearly 80 percent.
The company formerly known as Research In Motion unveiled a new corporate name and a new platform in January as it sought to regain momentum, but its most recent numbers suggest this has been a spectacular failure.
On Friday, the company announced it was laying off 4,500 staff or one-third of its global workforce after a dismal launch of new smartphones earlier this year that were meant to revive BlackBerry.
It also said it expected to post a nearly $1 billion loss in the second quarter due to writedowns linked to poor sales of its new Z10 touchscreen smartphone, a device aimed specifically at competing against Apple and Android devices.
Gold and other analysts said going private -- and possibly returning company founder Mike Lazaridis at the helm, as has been rumored -- would give the company breathing room to "put the house in order."
Going forward, BlackBerry would be a much smaller player in handheld devices, but "being private would mean that Wall Street is not continuously breathing down their neck," said Gold.
Furthermore, its key enterprise customers may not feel as compelled to replace their BlackBerry smartphones and servers for fear that the company is going out of business.
"It could provide them with cover to re-architect the company even more than they are now," said Gold.
The company's sustainability, however, still remains in doubt for most.
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