| TORONTO/NEW YORK
TORONTO/NEW YORK Aug 14 BlackBerry Ltd
is expected to draw preliminary interest from
technology companies, buyout firms and Canadian pension funds,
but its fate may ultimately rest in the hands of its largest
shareholder, Prem Watsa's Fairfax Financial Holdings Ltd
Any serious bidder would likely be hoping to get Watsa, the
Fairfax founder and chairman who is often called Canada's answer
to billionaire U.S. investor Warren Buffett, on their side,
because he could join in on a private equity deal or at the very
least be the bellwether for broader investment
"I would imagine that if Fairfax says they are against a
particular deal, that would carry a lot of weight, beyond just
the 10 percent that they control," said Richard Steinberg, who
heads Fasken Martineau's securities and mergers & acquisitions
group in Toronto.
Although it remains too early to tell determined buyers from
window-shoppers, sources familiar with the situation said some
of the world's largest private equity firms, including Bain
Capital LLC, KKR & Co LP and Carlyle Group LP,
are expected to look at BlackBerry when the company launches a
Leo De Bever, the chief executive of Alberta Investment
Management Corp, said he expected some of the largest Canadian
pension funds, including his own, to look at any potential deals
for the company.
Analysts said firms ranging from established mobile phone
players like Apple Inc and Samsung Electronics Co
to technology giants like Amazon.com Inc,
Facebook Inc, Cisco Systems Inc, Hewlett-Packard
Co and IBM Corp, may also be drawn to the
beleaguered smartphone maker's assets such as patents or its
network or instant messaging platforms.
Watsa stepped down from the BlackBerry board on Monday,
citing a potential conflict of interest, as the company said it
was exploring the sale of itself and other options.
Jefferies analysts have suggested that Fairfax could team up
with Canadian pension funds and banks to take BlackBerry
private, possibly for $15 per share.
Watsa hasn't said how much he would want for his stake in
BlackBerry. But one guidepost would be $17 per share, the
average price Fairfax has disclosed it has paid to build its 9.9
percent stake in the Canadian company over the last three years.
BlackBerry shares closed up 1.4 percent at $10.93 in New York on
Fairfax and BlackBerry declined to comment. Representatives
of the other companies and private equity firms either declined
to comment or did not respond to requests for comment.
The emergence of Watsa as the central figure in the drama
unfolding around BlackBerry underscores how quickly the
situation has spiraled out of the company's control.
BlackBerry has seen its market value nosedive to around $5.7
billion from more than $80 billion at its peak in 2008, as its
latest BlackBerry 10 devices struggle to challenge an onslaught
from the iPhone and devices running Google Inc's
Android operating system.
Fairfax, which has a market value of about $9 billion,
became the company's largest shareholder just last year, topping
Mike Lazaridis, BlackBerry's co-founder and former co-chief
executive, who has a 5.7 percent stake. BlackBerry's other
former co-chief executive Jim Balsillie disclosed in February he
had sold his remaining shares in the company.
To be sure, Fairfax is only the largest among a plethora
of BlackBerry shareholders, two-thirds of which will be asked to
approve any deal.
The average cost of Watsa's stake in BlackBerry is also low
by historical standards, which means it is not a very high bar
to clear for a technology company sitting on a massive pile of
cash. BlackBerry shares traded at $148 in 2008. They have traded
below $20 only in the last two years.
Any deal for BlackBerry remains far from certain. Private
equity and other suitors have circled the company for more than
two years and have come up empty so far. A foreign buyer would
also need approval from Canadian authorities.
Still, other BlackBerry shareholders may take cues from
"I don't think (Watsa) is going to look at the various
bidders and make qualitative choices. He's going to be making
quantitative choices (based on who pays top dollar)," said Ross
Healy, a portfolio manager with MacNicol & Associates, whose
clients own BlackBerry shares.