Blackberry deal: $4.7bn sale to Fairfax-led consortium sees $75bn wiped from firm's value in five years

Once-great mobiles firm was worth $80bn five years ago, now going for a song as sales vanish

New York

Blackberry has agreed to sell itself to a consortium led by its largest shareholder and go private in an attempt by the beleaguered Canadian mobile phone manufacturer to salvage its business. The deal values a company that was worth more than $80bn (£50bn) as recently as 2008 at a mere $4.7bn.

Days after company warned the stock market it was running up a massive quarterly loss of almost $1bn and preparing to lay off over a third of its global workforce, Blackberry’s shares were suspended on Monday as an announcement went out confirming that the firm had signed a letter of intent with a consortium of buyers led by Fairfax Financial, its biggest shareholder with about 10 per cent of the stock.

The possibility of a rescue deal involving the Canadian insurance conglomerate was first raised earlier this summer when Fairfax Financial’s head, Prem Watsa, gave up his post on Blackberry’s board of directors, citing potential conflicts of interest. The Indian-born Mr Watsa is a prominent investor often called “Canada’s Warren Buffett”.

But recent speculation focused on a different outcome: a potential deal involving Mike Lazaridis, the company’s co-founder and former co-chief executive, who was reported to be talking to the private equity groups Blackstone and Carlyle about lining up a bid.

The Fairfax offer values Blackberry’s shares at $9 apiece. The stock was worth more than $10 apiece at the close on Thursday but plummeted on Friday when the company announced that it was on track to post a crushing quarterly loss and planned to axe 4,500 jobs, including at its UK base in Slough.

The deal, which is subject to due diligence, has been approved by Blackberry’s board. But, according to the company’s announcement, the Fairfax consortium is still “seeking financing from BofA Merrill Lynch and BMO Capital Markets.”

Moreover, there remains the potential for a rival bid, with Blackberry allowed to solicit other possible buyers while Fairfax conducts due diligence.

The agreement between Blackberry and Fairfax is a milestone in the company’s rapid decline from the undisputed leader in the smartphone business to an also-ran desperately trying to win over customers tempted by Apple’s iPhones or Samsung’s Galaxy series of devices.

The figures are startling: according to IDC, a research firm, smartphones phones running on Blackberry’s operating system (OS) will end up with a worldwide market share of 2.7 per cent this year, against 75.3 per cent for phones running Google’s Android system, which powers Samsung’s phones, among others.

Apple’s iOS operating system, which drives the iPhone, has a nearly 17 per cent share. By 2017, Blackberry OS’s market shares is expected to fall to 1.7 per cent. Back in 2009, Blackberry had more than 20 per cent of the market.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...