/// Does Fairfax Have Resources — And Motivation — To Close BlackBerry Deal?

September 26, 2013  |  All Things Digital


So BlackBerry has found itself a buyer in majority shareholder Fairfax Financial Holdings. The question now is can Fairfax close the deal, and does it even want to? If the answer to those questions seems obvious, think again. Recall that Fairfax and its chairman, Prem Watsa, haven’t raised financing for the deal, and there’s a chance they might fail to do so. Keep in mind, too, that the firm’s letter of intent includes a go-shop provision that entitles it to 30 cents a share, about $157.2 million, if BlackBerry attracts and accepts an offer better than the $9 per share Fairfax is offering. So Fairfax, which doesn’t yet have the money to acquire BlackBerry, stands to make millions if someone else does. And for a company that bought big into BlackBerry in January of 2012 when the smartphone maker’s stock was trading between $15 and $17 a share — far above the $8.01 at which it closed Wednesday and the $9 Fairfax has offered — that’s likely an attractive outcome. In other words, the best case scenario for Fairfax is one in which BlackBerry rebuffs its offer. “I don’t think it was a serious bid,” Ironfire Capital founder Eric Jackson told AllThingsD . “I believe Watsa is trying to smoke out others into making a full acquisition. I think the best buyer is an American one: Microsoft, Cisco or IBM. I think that’s the play. If someone does a buyout, that $150 million break-up fee will go a long way to helping make back the money he put into this trade.” A reasonable theory, and one I’ve heard repeated a few times this week.

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Does Fairfax Have Resources — And Motivation — To Close BlackBerry Deal?


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