Fairfax opts out of buying manufacturer after completing six-week due diligence process. BlackBerry CEO Thorsten Heins to leave manufacturer in the next two weeks
Fairfax Financial Holdings has pulled out of a deal to buy BlackBerry for $4.7 billion (£3 billion) and will instead invest $1 billion (£627 million) into the company by raising money through institutional investors. The transaction is due to close in the next two weeks.
John S. Chen, CEO of software firm Sybase, will become executive chair of BlackBerry’s board of directors and will be responsible for the “strategic direction, strategic relationships and organisational goals of BlackBerry”.
BlackBerry CEO Thorsten Heins is stepping down from his position after two years, with Chen taking on the role temporarily while the search for a new CEO commences. BlackBerry director David Kerr is also resigning from the board.
Fairfax chairman and CEO Prem Watsa will be appointed as lead director and chair of the compensation, nomination and governance committee.
The changes follow September’s announcement that BlackBerry had signed a ‘letter of intent’ to sell its business to Toronto-based Fairfax for $4.7 billion (£3 billion).
Fairfax, which is a shareholder in BlackBerry and holds a 10 per cent stake, was given until today (November 4) to complete due diligence on the manufacturer.
Chair of BlackBerry’s board Barbara Stymiest said: “Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors. 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 favorable 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.”
Watsa added: “Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment, reinforces its deep commitment to the future success of this company. I look forward to rejoining the BlackBerry Board and to working with the other directors and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy and growth.”