The proposed sale of troubled phone specialist Blackberry to Fairfax Financial Holdings has been scrapped.
It was revealed last month that Fairfax had in principle agreed to acquire the company for $4.75bn. However, that announcement came with the proviso that both parties were able to walk away before November 4th.
That isn’t quite what has happened – instead, Fairfax and a group of investors have invested $1bn in the company. It's not known which party got cold feet.
It comes at a cost, however – CEO Thorsten Heins has been booted. He will be replaced in the interim by former Sybase man John Chen. Fairfax CEO Prem Watsa becomes lead director and chair of the compensation, nomination and governance committee.
Blackberry’s share price has tumbled 18.5 per cent on the back of the news.
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of pre-eminent, long-term investors,” BlackBerry’s board chair Barbara Stymiest stated.
“The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favourable to BlackBerry, enhancing our substantial cash position.
“Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”