Canadian Manufacturing

Group led by Fairfax to invest in, not buy, troubled BlackBerry

Deal will see Fairfax Financial Holdings Ltd., others invest $1-billion in device maker

November 4, 2013  by Dan Ilika

TORONTO and WATERLOO, Ont.—BlackBerry will not be taken private after all.

The embattled smartphone maker, which received a takeover offer in September that valued it at about $4.7-billion, will instead see a group of investors pony up $1-billion for a long-term debenture purchase.

The group of purchasers will be led by Fairfax Financial Holdings Ltd., the firm that launched the sole registered takeover bid for Waterloo, Ont.-based BlackBerry.

“(This) announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” Barbara Stymiest, chair of BlackBerry’s board, said in a release announcing the deal.

Fairfax and an undisclosed number of “other institutional investors” will shell out a $1-billion private placement of convertible debentures, with Fairfax acquiring a $250-million principle amount.


The debentures will have a term of seven years, according to BlackBerry.

“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position,” Stymiest said. “Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”

Among those changes will be the resignation of CEO Thorsten Heins, who took the helm from co-founders Jim Balsillie and Mike Lazaridis in 2012.

John S. Chen will be appointed executive chair of BlackBerry’s board of directors and will take over as interim CEO.

Chen was formerly chair and CEO of California-based software firm Sybase, Inc.

“I am pleased to join a company with as much potential as BlackBerry,” he said.

“BlackBerry is an iconic brand with enormous potential—but it’s going to take time, discipline and tough decisions to reclaim our success.

“I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.”

Expected to close within the next two weeks, the deal is subject to customary conditions, including approval from the Toronto Stock Exchange.

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