Previously, Fairfax Financial Holdings of Toronto made a conditional, nonbinding offer to purchase the 90 percent of BlackBerry shares it currently does not own for $9 each, thus valuing the struggling company at around $4.7 billion. However, on Monday Fairfax and a group of institutional investors decided to instead invest $1 billion by way of debt securities that can be converted into common shares at $10 a share. The transaction is expected to be completed within the next two weeks.
"Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry's Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry," BlackBerry said in a press release. "Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead Director and Chair of the Compensation, Nomination and Governance Committee and Thorsten Heins and David Kerr intend to resign from the Board at closing."
If the takeover bid collapse wasn't enough, BlackBerry Limited also said that Heins will step down as CEO at closing and Chen will serve as Interim CEO pending completion of a search for a new CEO. Meanwhile Lenovo, which reportedly had an interest in BlackBerry and signed a non-disclosure agreement to look at BlackBerry's books, was supposedly shot down by the Canadian government in regards to a takeover. There's speculation that this decision may have led BlackBerry to remove itself from the market and accept the new Fairfax deal on Monday.
According to unnamed sources, the Canadian government told BlackBerry that it would not accept a "Chinese takeover" due to national security concerns, as the smartphone maker is deeply tied into Canada's telecom infrastructure. Ottawa has reportedly made this clear over the last several months, thus to this date has not received a formal proposal from BlackBerry regarding Lenovo acquiring a substantial stake in the company.
"I don't think anybody should be surprised that we would have concerns like that," a Canadian government official said while cautioning against reading an anti-Chinese policy. "We have been pretty consistent that the message is Canada is open to foreign investment and investment from China in particular but not at the cost of compromising national security."
Sources told The Globe And Mail (opens in new tab) that Lenovo was very interested and would likely have purchased the struggling company. The paper also notes that last fall, Ottawa indicated to Chinese telecom equipment giant Huawei Technologies that it would block the company from bidding to build the Canadian government's latest telecommunications and e-mail network. The American government, while embracing Lenovo, claims that Huawei is a risk to national security.
Lenovo is currently the world's largest personal computer vendor worldwide, has operations in more than 60 countries, and sells its products in nearly 160 countries. The company employs around 33,000 people worldwide, and just recently opened its first North American manufacturing facility in North Carolina. Lenovo has a huge smartphone business overseas as well.