Fairfax Financial Holdings, which is BlackBerry Ltd's top shareholder with a 9.9% stake, is exploring ways to take the smartphone maker private, according to a report Monday from the Globe and Mail.
Prem Watsa, who is chief executive of Fairfax, stepped down from BlackBerry's board on Monday, citing a potential conflict of interest with the company's announcement that it was exploring strategic alternatives.
The Globe piece said there was no strategic disagreement between Watsa and the board, and all sides would have preferred he remain a director, according to these sources, who spoke on condition of anonymity. But Watsa stepped down in order to avoid criticism that he was in a conflict of interest.
BlackBerry, based in Waterloo, Ont., said its board of directors has formed a special committee to explore "strategic alternatives," including the possible sale of the company. The shares were up more than 10%, to $11.13, in late afternoon trading in Toronto.
BlackBerry has a market capitalization of about $5.8 billion. It had nearly $3 billion in cash and short-term investments as of June 1 and no debt.
Part of the rationale for going private would be that the company’s every move is under quarterly scrutiny right now from dozens of analysts, and that the criticism of its performance in the public market is a distraction to management. Being out of the public-company limelight would give BlackBerry more freedom and time to pursue different paths.
Sources indicated that at the same time Fairfax speaks to potential partners for a going-private transaction, the board and its bankers will be canvassing the market for other alternatives.
Tech Insider
