Shane Cole
Canadian device maker BlackBerry has taken itself off the market and will instead receive a $1 billion capital injection from a small group of investors, including former prospective buyer Fairfax Capital.
In concert with the investment, which the company says could increase to a maximum of $1.25 billion, CEO Thorsten Heins will resign both his seat on the board of directors and his executive post. The change of plans was first reported by The Globe and Mail and later confirmed by BlackBerry.
John S. Chen will step in as executive chairman of the moribund brand and temporarily replace Heins as interim CEO. Chen is a longtime veteran of the technology industry, having led Silicon Valley data management company Sybase from 1998 until its acquisition by German software behemoth SAP in 2010.
The investment will be made in the form of convertible notes, essentially long-term IOUs that can be redeemed for shares of the company after a set period of time — Â in this case seven years, with a strike price of $10 per share. BlackBerry notes the funding, if it reaches its full $1.25 billion potential, would represent nearly 20 percent of the company as it exists today.
BlackBerry has been seeking a way to right the ship for more than a year, as the increasing popularity of Apple's iPhone and devices running Google's Android have taken significant chunks out of BlackBerry's formerly dominant position in the enterprise. Heins, who was brought on in 2012 to lead the company's turnaround, presided over the disastrous rollout of the 10-series smartphones and the belated release of BlackBerry Messenger for iOS and Android.
The deal comes on the last day of the period that Fairfax, which agreed to acquire BlackBerry for $4.7 billion last month, was given to examine the company's books. Rumors that the buyout was on thin ice have been circulating seemingly since it was announced, with recent reports tipping groups including BlackBerry founder Mike Lazaridis and former Apple CEO John Sculley as potential alternative bidders.
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46 Comments
This isn't all that surprising. It was obvious that Fairfax was doing something a bit shady in making their offer that Blackberry accepted so quickly. Then after Blackberry accepts the offer, they send out letters of inquiry to at least 6 tech companies that we know of, in effect begging them to look the company over and make offers on the company in entire, or in part. That's almost unheard of! While some companies did sign agreements to look at Blackberry, none seemed to really be interested. It was more from curiosity. This is the end result of all that. I don't see how this is going to help the company survive.
Oh to have had enough capital to have short sold these losers even 6 months (or 3 months) ago.
Once the reports came out initially in the Canadian media about how Fairfax had an average cost per share of $17 for Blackberry, it was obvious Fairfax was hoping to hype the stock to cash out. It was never about an investment for a viable business. On the bright side, they got rid of Thursten Howell. What an idiot that guy is.
John Chen is a very capable, very solid player.
Heins did nothing but super blown marketing without results. It's logical he has to quit.