[Infowarrior] - Blackberry agrees preliminary deal to be sold to Fairfax

[Richard Forno]

23 September 2013 Last updated at 14:13 ET

Blackberry agrees preliminary deal to be sold to Fairfax

http://www.bbc.co.uk/news/business-24214301?print=true

Struggling smartphone maker Blackberry has agreed in principal to be bought by a consortium led by Fairfax Financial for $4.7bn (£3bn).

Blackberry said in statement that Fairfax, its largest shareholder, had offered $9 a share cash to buy the company.

Trading in Blackberry shares were halted in New York pending the announcement.

On Friday, Blackberry announced 4,500 jobs cuts in a bid to stem losses.

In August, the Canadian company said it was evaluating a possible sale.

The company said it has "signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings Limited has offered to acquire the company subject to due diligence".

The statement continued: "Diligence is expected to be complete by November 4, 2013. The parties' intention is to negotiate and execute a definitive transaction agreement by such date."

However, Blackberry said it was not in exclusive talks with Fairfax and would continue to "actively solicit, receive, evaluate and potentially enter into negotiations" with other potential buyers.

Brian Colello, analyst at Morningstar, said that taking Blackberry private would allow the company to reorganise without being under the glare of Wall Street investors and was therefore probably a good option.

He said: "Based on the company's disastrous earnings warning on Friday, I think a deal had to happen and the sooner the better. This is probably the only out for investors and the most likely outcome.

"The benefit to this sort of takeover is the ability for Blackberry and the consortium to reinvent the company without public scrutiny. It appears that the end game is going to be whether Blackberry can emerge as a niche supplier of highly-secured phones to enterprise customers and governments."

Blackberry's financial problems came to a head this year following disappointing sales of its new Z10 model smartphone.

Released in January - after many delays - the phone has failed to enthuse consumers.

Over the summer, word trickled out the company had hired a series of advisors to help it explore options.

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