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After announcing on Friday that 4,500 jobs will be cut, smartphone maker Blackberry has said that it has agreed in principle to sell to a consortium led by Fairfax Financial for $4.7 billion.
In a statement Blackberry said that Fairfax, its largest shareholder, had offered $9 a share in cash to buy the struggling company.
In New York, trading of Blackberry shares was stopped temporarily pending the announcement.
In the announcement, the company said it had “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”.
The statement continued with: “Diligence is expected to be complete by November 4, 2013. The parties’ intention is to negotiate and execute a definitive transaction agreement by such date.”
Despite these first steps with Fairfax, Blackberry has made it clear that it will still “actively solicit, receive, evaluate and potentially enter into negotiations” with other potential buyers.
Fairfax’s chairman and chief executive 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.”
Analysts think that this could be the best option for Blackberry, being able to re-invent and re-organise itself without the scrutiny from Wall Street investors.
Brian Colello from Morningstar said, “Based on the company’s disastrous earnings warning on Friday, I think a deal had to happen and the sooner the better. This is probably the only out for investors and the most likely outcome.
“The benefit to this sort of takeover is the ability for Blackberry and the consortium to reinvent the company without public scrutiny. It appears that the end game is going to be whether Blackberry can emerge as a niche supplier of highly-secured phones to enterprise customers and governments.”
Only time will tell if it is possible for Blackberry to re-emerge from this set-back and once again lead the way in the smartphone market.
[Image via Techno Buffalo]