The embattled smartphone maker BlackBerry announced today it has a $4.7 billion sale offer from Fairfax Financial to take the company private.
Fairfax has signed a letter of intent to buy BlackBerry for $9 a share. The buyout firm already owns 10 percent of the company, BlackBerry said in a statement.
"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," Prem Watsa, chairman and CEO of Fairfax, said in a statement. "We can deliver immediate value to shareholders, 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."
BlackBerry, once a leading mobile phone company, announced last week that it will lay off over 4,500 employees or 40 percent of its workforce.
After warning of a surprise billion-dollar second-quarter loss, the company's stock fell more than 20 percent Friday. BlackBerry said in a statement it expects to report quarterly revenue of $1.6 billion, compared with $3.04 billion that was expected, and a $950 million operating loss.
Brian Colello, analyst with Morningstar, said the offer from Fairfax was "expected" based on the company's warning on Friday.
"We saw little hope for the company as a standalone business," Colello told ABC News, adding that there is "no real hope" for the BlackBerry 10. Colello said Fairfax's offer is priced at Blackberry's cash plus its patents.
"If Fairfax and the consortium can turn around the company, then that would be a positive for them," he said.
The shares advanced to $8.92 when trading reopened today following a halt. It's not clear whether any other offers for the company have been advanced.
University of Notre Dame visiting professor of marketing Brett Robinson said it will be "extremely difficult" for Fairfax to turn BlackBerry around.
"Smart device manufacturers have to be agile when it comes to delivering media content," he said. "BlackBerry's recent attempt to launch a software messaging service could have been a smart move in that direction but was derailed by a premature leak. It seems like the company is always taking one step forward and two steps back."
The news of the offer comes after a series of bad quarters for the company. While the company released its the new 5-inch Z30 smartphone this week and its new BlackBerry 10 operating system in January, it has been struggling to keep pace with other phone makers. In the last quarter the company only shipped 2.7 million of its new BlackBerry 10 devices. Contrast that with Apple, which analysts expect could sell six million iPhones just this weekend.
The Wall Street Journal reported last month that BlackBerry's board was looking at alternatives for the company by November, including a possible sale. BlackBerry plans to release its once-popular BlackBerry Messenger or BBM for the iPhone and Android this weekend.
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