Public company going private: BlackBerry Ltd (NASDAQ:BBRY)’s stock plummeted by 17% on Friday and an extra 5.6% today, following the pre-announcement of very weak second-quarter results -including plans to write down almost $1 billion in unsold phone inventory. However, the stock was halted today, at 1:22 p.m. Eastern Time. Surprising most of Wall Street, the company announced a preliminary offer to buy the company at $9 a share from a consortium led by its largest shareholder, Fairfax Financial Holdings. The transaction is valued at approximately $4.7 billion in cash.
In a release from Blackberry, Barbara Stymiest, Chair of the company’s Board of Directors assured that “The Special Committee is seeking the best available outcome for the Company’s constituents, including for shareholders.”
The release states that: “The BlackBerry Board of Directors, acting on the recommendation of a special committee of the board of directors (the “Special Committee”), approved the terms of the LOI [Letter of Intention] under which the consortium, which is seeking financing from BofA Merrill Lynch and BMO Capital Markets, would acquire BlackBerry and take the company private subject to a number of conditions (…) Diligence is expected to be complete by November 4, 2013 (“Diligence Period”). The parties’ intention is to negotiate and execute a definitive transaction agreement by such date. During such period, BlackBerry is permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals.”
Trading of the stock reopened at 2:00 P.M. EST, and is already on the rise, and getting close to $9 a share. Short-sellers, be aware!
Blackberry Is Not Alone
However, Blackberry is not the only big-tech company going private. Dell Inc. (NASDAQ:DELL)'s CEO and founder, Michael Dell, has finally been able to take his company private, winning a long-standing battle against activist Carl Icahn. This will allow him to revive Dell Ventures, a segment that is dedicated to investing in startups in some of its core areas, like storage, cloud solutions, big data, software security, and mobility, amongst others.
While some doubts remain about Dell's capacity to turn into an IT services and solutions company, a revamped Dell Ventures will definitely help it transform, and drive growth going forward. However, notice that this would be more of a mid-to-long-term solution for the public company going private, which could see its own innovation ameliorate as Dell Ventures' investments pay off.
Disclosure: Javier Hasse holds no position in any stocks mentioned