Does Anyone Really Want to Buy BlackBerry (BBRY)?
Tweet
Share
E-mail
Get Alerts BBRY Hot Sheet
Join SI Premium – FREE
Like the old saying goes: markets don't lie.
In this case, the truth is being exposed for BlackBerry (Nasdaq: BBRY). Despite entering a letter of intent with Fairfax -- a 10 percent holder of the company -- on Monday for a potential takeover at $9 per share, BlackBerry ended Monday's session just just 1.1 percent better at $8.82. Generally, when prospects for a company look like they might go up, shares will trade above a proposed takeover price.
Like CNBC's David Faber on Monday, Bloomberg-cited sources said that Fairfax might not be able to pull off a deal. Sources said that Fairfax has yet to identify the other entities in its coalition to acquire BlackBerry and still needs to line up financing.
Bloomberg actually compared BlackBerry's potential deal to that of Dell (Nasdaq: DELL), which finalized a leveraged buyout (LBO) agreement this month following a long proxy battle. Unlike Dell, which has the backing of its founder and private equity firm Silver Lake, BlackBerry only has Fairfax committing its stake in the company right now and prospective buyers like KKR & Co. (NYSE: KKR) and/or Microsoft (Nasdaq: MSFT) aren't likely to join in anytime soon.
Also, unlike Dell, which maintains a relatively strong presence in the PC and enterprise computing environments, BlackBerry has been bleeding market share for at least the last five years. Given the dominance of Apple (Nasdaq: AAPL) iOS and Android, not to mention Microsoft's Windows Phone platform gaining a solid third-place mobile OS position, there's really few opportunities for BlackBerry beyond licensing agreements for its IP and BlackBerry Messenger service.
It is also speculated that BlackBerry co-founder and large stakeholder Mike Lazaridis might make a move on the company, or possibly join in the fight with Watsa. Those rumors haven't been affirmed as of yet.
With BlackBerry on the hook for a minimum $157 million break-up fee with Fairfax (about $0.30 per share), investors might still be looking to price in more downside for the company as prospects dim.
In this case, the truth is being exposed for BlackBerry (Nasdaq: BBRY). Despite entering a letter of intent with Fairfax -- a 10 percent holder of the company -- on Monday for a potential takeover at $9 per share, BlackBerry ended Monday's session just just 1.1 percent better at $8.82. Generally, when prospects for a company look like they might go up, shares will trade above a proposed takeover price.
Like CNBC's David Faber on Monday, Bloomberg-cited sources said that Fairfax might not be able to pull off a deal. Sources said that Fairfax has yet to identify the other entities in its coalition to acquire BlackBerry and still needs to line up financing.
Bloomberg actually compared BlackBerry's potential deal to that of Dell (Nasdaq: DELL), which finalized a leveraged buyout (LBO) agreement this month following a long proxy battle. Unlike Dell, which has the backing of its founder and private equity firm Silver Lake, BlackBerry only has Fairfax committing its stake in the company right now and prospective buyers like KKR & Co. (NYSE: KKR) and/or Microsoft (Nasdaq: MSFT) aren't likely to join in anytime soon.
Also, unlike Dell, which maintains a relatively strong presence in the PC and enterprise computing environments, BlackBerry has been bleeding market share for at least the last five years. Given the dominance of Apple (Nasdaq: AAPL) iOS and Android, not to mention Microsoft's Windows Phone platform gaining a solid third-place mobile OS position, there's really few opportunities for BlackBerry beyond licensing agreements for its IP and BlackBerry Messenger service.
It is also speculated that BlackBerry co-founder and large stakeholder Mike Lazaridis might make a move on the company, or possibly join in the fight with Watsa. Those rumors haven't been affirmed as of yet.
With BlackBerry on the hook for a minimum $157 million break-up fee with Fairfax (about $0.30 per share), investors might still be looking to price in more downside for the company as prospects dim.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Diana Shipping withdraws bid to acquire Genco Shipping
- ACCO Brands to buy European peripherals brand Trust for ~$100M revenue
- Silver Lake In Talks To Buy Workday, Sources Say - Reuters
Create E-mail Alert Related Categories
Insiders' Blog, Mergers and Acquisitions, Private EquityRelated Entities
David Faber, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
