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Blackhole: BlackBerry Could Sell for Less than $9 Per Share

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AllthingsD.com

Last week Canadian smartphone maker BlackBerry announced that it would be going private after its slow decline as a publicly traded company. The deal is reported to be financed by Canadian holding company, Fairfax Financial, which already owns 10 percent of BlackBerry’s stocks. Fairfax agreed to pay $9 per share for the rest of the company, valuing it at $4.7 billion. Upon further investigation, Fairfax didn’t agree to a deal; taking, instead, the option to purchase pending their due diligence. Fairfax also gave BlackBerry the option to find other suitors to buy the company. Now analysts report that BlackBerry could be sold for a lot less than $9 per share. According to allthingsd.com:

“Fairfax’s due diligence, may give the firm cause to revise its price before making an official offer for BlackBerry later this year. Mike Walkley at Canaccord Genuity thinks BlackBerry’s likely fate is a sale to Fairfax Financial and its partners for $7 a share. Jefferies analyst Peter Misek sees a similar final price. ‘The bid could be lowered to (approximately) $7 as a last resort,’ Misek said. ‘We think other bidders will be unlikely.'”

BlackBerry still has the option to find another buyer, but that seems unlikely according to analysts, since it has been unable to do so in the last few months. Even if BlackBerry finds another buyer, it would have to pay the $157 million fee to Fairfax Financial to get out of their option.

According to bloomberg.com:

“BlackBerry’s willingness to agree to a fee without signing a definitive agreement is ‘unheard of’ and may have a chilling effect on its auction, according to Tor Braham, the former head of technology investment banking at Deutsche Bank AG. If a higher bid comes along, Watsa — a BlackBerry board member until last month — gets the termination fee plus he can cash out on an almost 10 percent holding.”

Fairfax has until November 4th to tell BlackBerry if it will move forward with the deal. If it doesn’t move forward, BlackBerry could see its stock drop a lot further, especially after posting a $1 billion loss in its last quarter.

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