Cerberus investment eyes BlackBerry bid

4 Oct 2013

NEW YORK CITY, USA: The private equity firm Cerberus Capital Management is interested in a bid for troubled Canadian smartphone manufacturer BlackBerry, a source familiar with the matter said.

The source indicated that the investment group was preparing to sign a confidentiality agreement to examine BlackBerry's finances for a possible counter-offer to a US$4.7bn plan agreed with Fairfax Financial Holdings last month.

BlackBerry said on 23 September it signed a letter of intent for the buyout, which translates to US$9 a share, led by Fairfax. The deal is subject to due diligence by Fairfax and allows BlackBerry to consider other offers.

Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry's largest shareholder with about 10 percent of its shares.

Watsa resigned from BlackBerry's board in August when it announced a search for a suitor and some analysts have said they do not believe the Fairfax buy-out will take place, speculation the deal was done to attract other offers.

BlackBerry shares have been trading below the Fairfax offer of US$9 at US$7.96.

Large pile of cash

An analysis released this week by the research firm Trefis said however that BlackBerry is worth the US$4.7bn offered by Fairfax, after it added up the value of its services, hardware and software operations along with the pile of cash it holds.

BlackBerry had about US$2.6bn in cash at the end of the past quarter. New York-based Cerberus, which specialises in distressed companies, manages about US$20bn in assets, according to its website. It was a lead investor in Chrysler before the car manufacturer's collapse in 2008.

While BlackBerry helped create a culture of mobile users glued to smartphones, many have since moved to iPhones or devices using Google's Android software.

According to International Data Corporation, BlackBerry's global market share had slipped to 3.7% in the second quarter, the lowest since tracking began.

Android accounts for nearly 80% of the market. A survey by Kantar Worldpanel ComTech said BlackBerry captured just 2.4% of sales across the big five European markets and 1.8% in the United States in the three months ending in August.

BlackBerry still has about 70m users worldwide but most of these are using older handsets, with the newer devices on the BlackBerry 10 platform failing to gain traction.

BlackBerry lost US$965m in the past quarter as sales plummeted.

Source: AFP via I-Net Bridge

Source: I-Net Bridge

For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.

We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.

Go to: http://www.inet.co.za