BlackBerry-Fairfax Deal Specifics: A Look at the Offer Letter

BlackBerry-Fairfax deal: BlackBerry Ltd (NASDAQ:BBRY), a company that is currently in the middle of many discussions regarding a potential takeover, recently received an offer from its largest shareholder, Canadian hedge fund Fairfax Financial Holdings, managed by Prem Watsa. According to a letter sent from Fairfax to BlackBerry, the fund offered a price of $9.00 per share to purchase 100% of the common shares of the company, without including the shares already held by Fairfax. The total amount of the transaction comes to $4.7 billion.

According to the letter of intent agreement, signed between Fairfax and BlackBerry, parties agreed to negotiate and come to a final agreement by November 4. Also, Fairfax and BlackBerry agreed on a $0.30 per share fee that will be paid by BlackBerry in case the latter enters into a letter of intent or signs a definitive agreement which provides an alternative transaction, as well as other causes, listed below:

“(b) During the Diligence Period the Company ceases to negotiate with the Consortium in good faith with a view to entering into the Definitive Agreement by the end of the Diligence Period;

(c) During the 3 month period following the end of the Diligence Period, the Company shall enter into any agreement providing for an Alternative Transaction with a person with whom discussions regarding an Alternative Transaction were held before or during the Diligence Period; or

(d) During the Diligence Period, an Alternative Transaction other than as contemplated in clause 6(a), (b) or (c) is publicly proposed or publicly announced by a third person and such Alternative Transaction with such person is consummated within 6 months following the end of the Diligence Period,” Fairfax said in its filing with the SEC.

Fairfax currently holds around 51.9 million shares of BlackBerry, which is equivalent to about 10% of the company. BlackBerry is going through a rough period, with management deciding to lay off around 40% of its employees while forecasting a loss of some $1 billion for the next quarter. Amid the news, the stock of BlackBerry is not doing so good either, with the share price falling by more than 40% in the last six months and losing around 15% in the past five days. Stay here for more updates on the BlackBerry Fairfax deal.

Here’s the full letter:

EX-2, BlackBerry Limited-Fairfax Financial Holdings Limited

Recommended Reading:

BlackBerry Takeover: Who Will Be Targeted Next?

BlackBerry Outlook & A Short Recap

BlackBerry Restructuring to Shake Up Handset Supply Chain

Disclosure: none