By Soyoung Kim, Nadia Damouni and Nicola Leske
NEW YORK Nov 1 Fairfax Financial Holdings Ltd
is struggling to raise financing for its $4.7 billion
bid for BlackBerry Ltd, with several large banks
declining to participate on concerns that the smartphone maker
will not be able to reverse its fortunes, according to people
familiar with the matter.
Fairfax, which is run by Canadian financier Prem Watsa, is
working with Bank of America Merrill Lynch and BMO
Capital Markets to put together a lending syndicate for a deal,
but they have been turned down by several large lenders, the
Bank of America Merrill Lynch and BMO both have deep pockets
themselves, and it is still possible they will muster the
necessary financing for Fairfax to submit a definitive bid.
Fairfax, the largest shareholder in BlackBerry with a 10
percent stake, reached a tentative $9-per-share deal with
BlackBerry in late September, and has until Nov. 4 to negotiate
a definitive agreement.
Several other potential bidders are also mulling
participation in BlackBerry's future. The deadline for them to
submit bids for the company is also Monday.
Fairfax and BlackBerry declined to comment.
The difficulties Fairfax has had in raising financing
underscore the fading relevance of BlackBerry, which once
pioneered on-the-go email but has bled market share to Apple
Inc's iPhone and devices using Google Inc's
Android software in recent years.
Should Fairfax fail to put together a bid for BlackBerry, a
deal could still be possible with other technology companies in
the sector. BlackBerry founders Mike Lazaridis and Douglas
Fregin have also declared their interest in buying BlackBerry.
Lazaridis and Fregin are working to submit a joint bid with
private equity firm Cerberus Capital Management LP, a person
familiar with the matter said on Friday. Chipmaker Qualcomm Inc
also may join the bidding group, that person added.
It was not clear whether Lazaridis and Fregin would overcome
the financing hurdles that Fairfax faces. Cerberus and a
spokesman for the two founders declined to comment, while
Qualcomm did not immediately respond to requests for comment.
STRATEGICS MAY BE TEAMED UP
BlackBerry also remains in discussions with several
technology companies about a deal, the people familiar with the
matter said this week, asking not to be named because the matter
The company's advisers are looking to pair up the technology
companies that are pursuing different parts of BlackBerry, which
include hardware, operating systems, patent portfolios and
network assets, the people said.
BlackBerry has held talks with a number of companies
including Cisco Systems Inc, Google Inc, SAP
AG, Lenovo Group Ltd, Samsung Electronics
, LG Electronics Inc and Intel Corp
about selling part or all of itself, Reuters previously
Some of these companies, including SAP, have since walked
away from the deal, although the situation is fluid and there is
possibility that interest may be renewed, two people said. A SAP
spokesman said BlackBerry did not fit with the company's
In a Sept. 25 interview with Reuters, Fairfax Chief
Executive Watsa - often described as Canada's answer to Warren
Buffett - said he was confident his consortium could find the
money needed to fund their bid.
However, the proposal has met with rising skepticism as
BlackBerry's prospects continued to darken. The company in
September reported a quarterly loss of nearly $1 billion after
taking a writedown on unsold Z10 phones.
Adding to the company's woes, it's likely to burn through
almost $2 billion of its cash pile in the next year and a half,
Bernstein analyst Pierre Ferragu wrote last month.
Canada's top pension funds - widely considered to be among
the most likely backers of Watsa's proposal - declined to
comment. However, some of their influential heads have already
publicly indicated that they are unlikely to play any role in a
bid for BlackBerry.
"No one has really committed themselves to any group because
none of the people that have been circling around BlackBerry
have come up with a very convincing business plan," Alberta
Investment Management Corp's head Leo de Bever said on BNN
Television, earlier this week.
The head of Caisse de Depot et Placement du Quebec -
Canada's second-largest pension fund told Bloomberg last month
that the Caisse was also unlikely to invest in BlackBerry, as it
prefers investing in more predictable businesses such as
Coca-Cola Co and Colgate-Palmolive Co.