The Inevitable Happens! Blackberry Sold To Fairfax Financial Holding For $4.7 Bn

The troubled Canadian smartphone maker Blackberry has agreed to be acquired by a consortium led by a Canadian based financial holdings company Fairfax Financial Holding for $4.7 Bn. The deal is still under due diligence and regulatory approval.

Fairfax Financial Holding has a 6-week window for due-diligence during which Blackberry can still shop for better offers. The stock markets have reacted positively to the news as Blackberry shares jumped 1.7% to trade at $8.87 on NASDAQ.

While one might wonder if $4.7 Bn is too low for Blackberry but given the performance of the company in the last few years, it should not come as a surprise.

Blackberry acquisition: A Financial Buy, Not A Strategic One

The Blackberry deal is unlike Nokia-Microsoft deal in terms of the probably intent of the buyer.

In the case of Nokia-Microsoft deal, Microsoft is likely to integrate Nokia as part of its own hardware divisions thereby leveraging the intellectual capital and assets of Nokia.

However, incase of Blackberry the suitor is a financial holdings company. There is a possibility that Fairfax will restructure the company, introduce initiatives to streamline the operations and then present Blackberry to other potential buyers at a later stage thereby making the Blackberry acquisition a financial play more than a strategic play

The timing of the Blackberry acquisition is interesting. There were questions around Blackberry’s future post the acquisition of Nokia by Microsoft.

With Blackberry’s acquisition, the chances of the company spinning off a instant messaging service company also seems unlikely.