BlackBerry’s fate is coming into focus. The company announced
on Monday that it has signed a letter of intent with a consortium led by
Fairfax Financial to buy out the company for about $4.7 billion, or $9 per
share.
Fairfax CEO Prem Watsa, a former BlackBerry board member,
said that the buyout would make BlackBerry a private company and would “open an
exciting new private chapter for BlackBerry, its customers, carriers and
employees.” BlackBerry says it expects Fairfax to finish conducting its due
diligence by November 4th.
Even though the deal is non-binding at this point, BlackBerry
will still have to pay Fairfax a fee of $0.30 per share if the deal doesn’t
happen. BlackBerry shares jumped about 3% on on the news. The company’s full
press release follows below.
BlackBerry enters into letter of intent with consortium led
by Fairfax Financial
WATERLOO, ONTARIO–(Marketwired – September 23, 2013) –
BlackBerry Limited (NASDAQ: BBRY)(TSX: BB) today announced it has signed a
letter of intent agreement (“LOI”) under which a consortium to be led by
Fairfax Financial Holdings Limited (“Fairfax”) has offered to acquire the
company subject to due diligence.
The letter of intent contemplates a transaction in which
BlackBerry shareholders would receive U.S. $9 in cash for each share of
BlackBerry share they hold, in a transaction valued at approximately U.S. $4.7
billion. The consortium would acquire for cash all of the outstanding shares of
BlackBerry not held by Fairfax. Fairfax, which owns approximately 10 percent of
BlackBerry’s common shares, intends to contribute the shares of BlackBerry it
currently holds into the transaction.
The BlackBerry Board of Directors, acting on the
recommendation of a special committee of the board of directors (the “Special
Committee”), approved the terms of the LOI under which the consortium, which is
seeking financing from BofA Merrill Lynch and BMO Capital Markets, would
acquire BlackBerry and take the company private subject to a number of
conditions, including due diligence, negotiation and execution of a definitive
agreement (the “Definitive Agreement”) and customary regulatory approvals.
The Special Committee, chaired by Director Tim Dattels, was
formed in August 2013 to review strategic alternatives for the company. J.P.
Morgan and Perella Weinberg are acting as financial advisors and Skadden, Arps,
Slate, Meagher & Flom LLP and Torys LLP are acting as legal advisors.
Diligence is expected to be complete by November 4, 2013
(“Diligence Period”). The parties’ intention is to negotiate and execute a
definitive transaction agreement by such date. During such period, BlackBerry
is permitted to actively solicit, receive, evaluate and potentially enter into
negotiations with parties that offer alternative proposals (“Alternative Transactions”).
If (A) during the Diligence Period
(i) BlackBerry enters into any letter of intent or definitive
agreement providing for an Alternative Transaction,
(ii) BlackBerry ceases to negotiate with the consortium in
good faith with a view to entering into the Definitive Agreement by the end of
the Diligence Period, or
(iii) an Alternative Transaction is publicly proposed or
publicly announced and is consummated within 6 months following the end of the
Diligence Period, or
(B) during the 3 month period following the end of the
Diligence Period, BlackBerry enters into any agreement providing for an
Alternative Transaction with a person with whom discussions were held before or
during the Diligence Period, then BlackBerry shall pay Fairfax a fee of U.S. $0.30
per BlackBerry share, provided, however, that no such fee shall be payable if
the consortium shall have reduced the price offered below U.S. $9.00 per share
without the approval of the board of directors of BlackBerry. In the event that
a definitive agreement is signed with Fairfax the termination fee will increase
to U.S. $ 0.50 per share.
Barbara Stymiest, Chair of BlackBerry’s Board of Directors,
said: “The Special Committee is seeking the best available outcome for the
Company’s constituents, including for shareholders. Importantly, the go-shop
process provides an opportunity to determine if there are alternatives superior
to the present proposal from the Fairfax consortium.”
Prem Watsa, Chairman and CEO of Fairfax, said: “We believe
this transaction will open an exciting new private chapter for BlackBerry, its
customers, carriers and employees. We can deliver immediate value to
shareholders, while we continue the execution of a long-term strategy in a
private company with a focus on delivering superior and secure enterprise
solutions to BlackBerry customers around the world.”
In addition to the consortium and its lenders being satisfied
with all aspects of the due diligence to be carried out by them during the
Diligence Period and the negotiation and execution of a binding definitive
agreement approved by the board of BlackBerry, completion of the transaction
will be subject to other customary conditions, including receipt of required
regulatory approvals. There can be no assurance that due diligence will be
satisfactory, that financing will be obtained, that a definitive agreement will
be entered into or that the transaction will be consummated.
BDT & Company, LLC, BofA Merrill Lynch and BMO Capital
Markets are acting as financial advisors, and Shearman & Sterling LLP and
McCarthy Tetrault LLP are acting as legal advisors to Fairfax in connection
with the transaction.
