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By | Rik Myslewski 23rd September 2013 18:40

BlackBerry inks deal to go private for $4.7bn

Struggling Canucks have until November 4 to find better offer

BlackBerry – or, as the struggling Canadian smartphone manufacturer has been renamed by the chattering classes, "Beleaguered BlackBerry" – has signed a letter of intent to be taken private by a consortium led by Fairfax Financial Holdings of Toronto, Ontario.

Fairfax currently owns about 10 per cent of BlackBerry, and the consortium would acquire the remaining shares, in cash, at $9 per share – less than BlackBerry shares were going for before the company's announcement last Friday that it would report a net loss of between $950m and $995m for its most recent quarter, which ended on August 31.

That $9 price would make the deal worth about $4.7bn. BlackBerry's shares shot up to $9.50 on the news, but as we click Publish on this story, have sunk back down to $9.05.

"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," Fairfax chairman and CEO Prem Watsa said in a statement announcing the letter of intent.

"We can deliver immediate value to shareholders," Watsa said, "while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world."

Fairfax is seeking financing from Bank of America Merrill Lynch and BMO Capital Markets, and the move to take BlackBerry private is "subject to a number of conditions, including due diligence, negotiation and execution of a definitive agreement, and customary regulatory approvals."

The deal was negotiated by the "Special Committee" formed last month by BlackBerry's board of directors with the mandate to explore options that "could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the company or other possible transactions."

The due diligence period is "expected" to end on November 4 of this year. Between today and that date, the letter of intent says that BlackBerry can proceed with a "go-shop process" that, in the words of BlackBerry board chair Barbara Stymiest, "provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium."

It's now time for the betting to begin on whether any such alternative will be found. ®

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