Struggling smartphone maker BlackBerry on Monday signed a tentative deal to be acquired by a consortium led by its biggest shareholder, setting a $4.7-billion floor in the auction of the Canadian company that pioneered on-the-go email.
BlackBerry, 10% owned by Prem Watsa's Fairfax Financial Holdings Ltd, has been on the block since August after a few difficult years.
Previously known as Research In Motion, the company was late to the game of consumer-friendly touchscreen smartphones, and it bled market share to the iPhone from Apple Inc and devices using Google Inc's Android operating system.
The offer comes from a consortium led by Fairfax that has offered $9 a share in cash to take BlackBerry private, away from constant Wall Street scrutiny. The group is seeking financing from Bank of America Merrill Lynch and BMO Capital Markets to complete the deal.
BlackBerry has until November 4 to seek superior offers, which is also the deadline for the Fairfax-led group to conduct its due diligence.
Its NASDAQ-listed shares, halted pending the afternoon announcement, rose to $9.20 U.S. as trade resumed but quickly slipped back to around $8.80 by mid-afternoon, indicating the market's lack of faith that other offers would emerge.
A BlackBerry statement did not name the members of the consortium, although many in the financial community see Canada's deep-pocketed and influential pension funds as likely participants.
The funds, with assets around the world, traditionally take a long-term view in their investment decisions. Officials at the biggest funds either did not reply to requests for comment, said they had no information or declined to comment.
BlackBerry, based in Waterloo, Ontario, pioneered the concept of on-your-hip email with its first email pagers, offering secure email away from an office, and for years it was the must-have device for governments, businesses and lawyers.
But recent years have been hard. BlackBerry warned on Friday it would report revenue on the sale of just 3.7 million of its phones for the entire second quarter, as well as writing down almost $1 billion worth of unsold phones.
By contrast, Apple sold nine million iPhone 5s and iPhone 5c models in three days after their Friday launch.
The going-private offer price is far below BlackBerry's share price in the heady days before the iPhone ended the BlackBerry's dominance of mobile communications.
Even in its more recent history - littered with profit warnings, job cuts and devices that arrived late to disinterested audiences - BlackBerry shares have rarely dipped below $9 U.S.
In the past 12 months the shares have risen as high as $18.32 and fallen as low as $6.22 U.S. on the NASDAQ.
On Monday, BlackBerry shares in Toronto dipped a penny to $9.07, while Fairfax shares took on $3.82, or 0.9%, to $419.67.
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