Fairfax Bid Places Little Value on BlackBerry (BBRY)
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Fairfax could be getting BlackBerry (Nasdaq: BBRY) on the cheap. On the very cheap, actually.
On Monday, Fairfax and BlackBerry entered a letter of intent for Fairfax to acquire BlackBerry in a $4.7 billion deal, or about $9 per share. The offer pegs BlackBerry at an 80 percent discount to its book value and 0.17 times trailing 12-month sales, which is the cheapest multiple among similar-sized peers in the North American telecom or tech sector, according to Bloomberg-compiled data.
Inclusive of cash and equivalents of $2.8 billion reported in the recent quarter, the offer values BlackBerry at $1.9 billion.
BlackBerry has a six-week "go-shop" period in its offer, but analysts think the mobile device player should be happy with the $9 per share offer. Last Friday, the company announced that Q2 sales would come in drastically below expectations, it would write-off up to $960 million, and will cut about 4,500 positions.
Microsoft (Nasdaq: MSFT) and Nokia (NYSE: NOK) announced a deal earlier in the month for Nokia's Devices & Services unit which values Nokia at 0.42 times trailing 12-month sales. BlackBerry generated about $11.3 billion of revenue in the last 12-month time frame.
And a deal is all but done. Fairfax might cut its offer after performing due diligence. MKM values BlackBerry at $7 per share, ex cash, a 22 percent discount to Monday's offer. It's also unlikely that other bidders would come in over the top for the company.
Shares of BlackBerry are down 2.7 percent Tuesday.
On Monday, Fairfax and BlackBerry entered a letter of intent for Fairfax to acquire BlackBerry in a $4.7 billion deal, or about $9 per share. The offer pegs BlackBerry at an 80 percent discount to its book value and 0.17 times trailing 12-month sales, which is the cheapest multiple among similar-sized peers in the North American telecom or tech sector, according to Bloomberg-compiled data.
Inclusive of cash and equivalents of $2.8 billion reported in the recent quarter, the offer values BlackBerry at $1.9 billion.
BlackBerry has a six-week "go-shop" period in its offer, but analysts think the mobile device player should be happy with the $9 per share offer. Last Friday, the company announced that Q2 sales would come in drastically below expectations, it would write-off up to $960 million, and will cut about 4,500 positions.
Microsoft (Nasdaq: MSFT) and Nokia (NYSE: NOK) announced a deal earlier in the month for Nokia's Devices & Services unit which values Nokia at 0.42 times trailing 12-month sales. BlackBerry generated about $11.3 billion of revenue in the last 12-month time frame.
And a deal is all but done. Fairfax might cut its offer after performing due diligence. MKM values BlackBerry at $7 per share, ex cash, a 22 percent discount to Monday's offer. It's also unlikely that other bidders would come in over the top for the company.
Shares of BlackBerry are down 2.7 percent Tuesday.
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