BlackBerry Board Opposes Potential Break Up Of The Company – Report

BlackBerry reportedly rejected advances for individual parts of the company as it believed a break up was not in the best interests of all stakeholders, including customers, employees and suppliers, not just shareholders.

Microsoft and Apple both apparently expressed an interest in the struggling Canadian manufacturer’s intellectual property and patent portfolio, while Cisco, Google and Lenovo all held discussions about acquiring some of BlackBerry’s assets.

However the BlackBerry board of directors feared that a sale of individual parts of the company could cause other assets to decline in value, while shutting down some of its business could create liabilities, such as its commitments to suppliers.

BlackBerry board

Lenovo in particular was interested in a takeover, but any such discussions were nipped in the bud by the Canadian government, which had the power to veto the sale due to security concerns.

It felt that a sale of the entire company to Fairfax Holdings was the best option, but when that fell through, apparently due to concerns about the structure of a deal according to Fairfax CEO Prem Watsa, the financing deal it agreed with a number of private companies offered the most certainty.

BlackBerry announced last week it had abandoned its search for a buyer and would instead raise $1 billion in fresh financing from a variety of companies, including Fairfax, although it could be tempted to entertain a takeover bid in the future.

The list of investors was revealed in a government filing and shows that the largest single investor is Canso Investment Council, which is stumping up $300 million, with Fairfax the second largest with $250 million.

Fresh investment

Other investors include Power’s Mackenzie Financial division, Markel Corp, Qatar Holding and Brookfield, all of whom are pledging between $200 million and $50 million. BlackBerry said it no longer plans to sell the company, but if it is taken over within 30 days of the deal closing, investors will be paid a combined $135 million.

Watsa attributed much of the optimism to the appointment of John Chen, who will serve as the executive chair and interim chief executive of BlackBerry in the wake of the departure of Thorsten Heins.

Chen previously took over Sybase, an enterprise and services company that was sold in 2010 for six times of what it was worth when he first assumed the role, and it is hoped he can work similar magic at BlackBerry. Chen will receive a pay package that includes restricted shares worth $85 million, but he must stay for five years in order to receive all of it in an effort to make him think like a long-term shareholder.

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