Wednesday, March 12, 2014
NEW YORK - BlackBerry Ltd., once valued at $83 billion, may be stuck with the cheapest valuation ever for a North American technology or telecommunications takeover.
The smartphone maker said Monday it reached a tentative agreement for a $4.7 billion buyout by a group led by Fairfax Financial Holdings Ltd., its biggest shareholder. Including net cash, the proposal values the Waterloo, Ontario-based company at an 80 percent discount to its book value and just 0.17 times its sales, the cheapest revenue multiple on record among similar-sized North American telecommunications or technology acquisitions, according to data compiled by Bloomberg.
While the company has six weeks to seek other bids, Pacific Crest Securities said investors should be happy to get the $9 a share that Fairfax is offering. Chief Executive Officer Thorsten Heins, who took over in January 2012, didn't publicly disclose the company was for sale until last month after almost a year of canvassing potential buyers. Now, BlackBerry has posted a string of quarterly sales declines and lost almost $79 billion in market value as it fell behind Apple and Google. Last week, BlackBerry said it will cut a third of its workforce and take a writedown of as much as $960 million.
"It is being valued like a broken company," said Anil Doradla, a Chicago-based analyst at William Blair & Co. "They had a chance to potentially execute on an M&A deal when these guys were doing better. So by the time Thorsten Heins came on board, I think it was too little, too late."
Including the $2.8 billion of cash and equivalents BlackBerry had in the most recent quarter, the proposal values the company at about $1.9 billion. The group led by Toronto- based Fairfax is still seeking financing for the offer, which is subject to due diligence and further negotiation.
Fairfax owns about 10 percent of BlackBerry's common stock. BlackBerry didn't name the other members of the takeover consortium. Fairfax CEO Prem Watsa said in an interview that the consortium at this point doesn't include Mike Lazaridis, inventor of the BlackBerry and former co-CEO of the company, who has a 5.7 percent stake in the company.
Lisette Kwong, a spokeswoman for BlackBerry, declined to comment on the Fairfax bid and reiterated that the deal includes a go-shop period that may reveal other offers.