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BlackBerry Buyout Negotiations Continue, Drive Up Stock Price

As we discussed on this blog in August, BlackBerry Ltd. (formerly Research in Motion) had appointed a special board of directors committee to consider its strategic alternatives in light of its enormous drop in global market share. At that time, the New York Times’ DealBook blog had reported that BlackBerry’s market share had fallen to only 2.9 percent, and its value had fallen by 92 percent over the previous five years. Faced by these poor business prospects, the company was considering the sale of some assets or even the whole company, going private, or a joint venture.

At that time, the Canada Pension Plan Investment Board was thought to be considering buying the company or some of its assets, but no deal materialized. Last month, BlackBerry announced that one of its largest shareholders, Fairfax Financial Holdings Ltd., had signed a letter of intent contemplating purchasing the company for $4.7 billion, or $9 per share, but that both companies were interested in other investors.

Recently, Reuters cited “several sources close to the matter” to report that a few new parties may be interested. Google, Cisco Systems, Inc., and SAP AG are thought to be actively engaged in partial or full buyout negotiations, and the private equity firm Cerberus is also believed to have expressed interest.

BlackBerry has essentially refused to comment, saying in a statement, “we do not intend to disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives.” However, BlackBerry has asked Intel Corp., LG Corporation and Samsung to provide for preliminary expressions of interest by early next week.

Buyout negotiations are naturally kept out of the public eye where possible, but BlackBerry’s share value rose by 4.2 percent to $8.01 in Monday morning trading. One analyst interviewed, however, is standing by his recommendation that investors hold their BlackBerry stock, as be believes Fairfax Financial Holdings’ bid of $9 per share is the most likely to come through.

Source: ABC News, “Blackberry Shares up on Report of Buyout Interest,” Associated Press, Oct. 7, 2013

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