BlackBerry accepts $4.7bn deal to go private
Former smartphone heavyweight BlackBerry announced yesterday that the company is to be made private following the continuing drop in share prices.
The Canadian company has made a deal with current investors Fairfax Financial Holdings, worth $4.7bn (£2.93bn). Fairfax increased its stake in BlackBerry in January 2012 from 2 per cent to 10 per cent, since then BlackBerry's share price has plummeted to $8.23; the holdings company has now offered $9 a share to buy BlackBerry.
On Friday BlackBerry announced 4,500 jobs are going to be cut, amounting to 35 per cent of the workforce. These latest drastic decisions follow an announcement in August that the struggling company was considering different strategies for the future, when it was revealed that they expected to make a $1bn loss after poor sales of their latest handset the BlackBerry Z10.
"Canadian success story"
Fairfax's chief executive Prem Watsa described BlackBerry as the "Canadian success story" back in 2012, but one that was likely to take four to five years to successfully turn around.
Little over a year later the billionaire has stepped in to rescue the smartphone manufacturer with almost three decades of similar reformation stories behind him. In a statement to the BBC he said:
"We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.
"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."
The move to privatise BlackBerry will remove it from the Wall Street radar, as critics suggest that this could give it the opportunity to reinvent itself as a niche supplier of high-security phones for business enterprises.
Daniel Nolan, managing director at theEword said: "I doubt this will come as much of a shock to consumers following the decline of BlackBerry since its peak in 2007. A buy out was likely to be its only option for future success and a partnership with Prem Watsa, who has a history of achieving great things when a company appears to be on the brink, is a very good move."