BlackBerry Ltd. (BBRY)’s announcement that it will consider takeover bids followed almost a year of advisers unsuccessfully canvassing potential buyers in search of a deal, two people with knowledge of the matter said.
In recent months, as BlackBerry sales and subscriber numbers deteriorated, bankers from JPMorgan Chase & Co. (JPM) and RBC Capital Markets quietly contacted possible bidders and found little interest in buying the whole company, especially among private-equity firms, said the people, who asked not to be named because the talks were private.
BlackBerry’s dimming prospects led the company to announce on Aug. 12 a special board committee that will evaluate all possible options, including joint ventures, partnerships or an outright sale. Prem Watsa, a Toronto businessman and BlackBerry’s largest shareholder, also is stepping down from the board, signaling that he may play a role in rescuing the company. JPMorgan is conducting the strategic review.
BlackBerry’s board and its advisers are now waiting to see whether Watsa and his investment firm, Fairfax Financial Holdings Ltd. (FFH), will put together a bid to take the company private, the people said. That would let BlackBerry restructure itself away from public scrutiny. No offer has been made so far, according to the people.
Adam Emery, a spokesman for Waterloo, Ontario-based BlackBerry, declined to comment, as did Toronto-based Fairfax, which owns almost 10 percent of the smartphone maker. Representatives from JPMorgan and RBC also declined to comment.
BlackBerry’s decline began at least three years ago, when its slow reaction to Apple Inc. (AAPL)’s smartphone innovations began taking a toll on the company’s once-torrid sales growth. The revamped BlackBerry 10 system didn’t debut until this January, six years after Steve Jobs unveiled the iPhone -- too late for the company to recover from an exodus of users and developers. Apple and Google Inc. (GOOG)’s Android platform also have made inroads in the corporate market, once BlackBerry’s biggest stronghold.
Over the past three days, optimism that BlackBerry could finally attract a buyer has propelled the stock by 15 percent. The shares rose 2.3 percent to $11.18 at 10:58 a.m. in New York.
BlackBerry’s advisers had suggested in late 2011 that it explore a sale as the company’s smartphones continued to lose market share to the iPhone and Samsung Electronics Co. (005930)’s Galaxy lineup of devices, said one of the people. Instead, co-founders and co-Chief Executive Officers Mike Lazaridis and Jim Balsillie stepped down from the board and were replaced by Thorsten Heins, a former Siemens AG executive who had been serving as BlackBerry’s chief operating officer.
BlackBerry made the decision to form a special committee and publicly announce a strategic review because it was concerned about its financial results and disappointing unit sales of the BlackBerry 10 phones, said the person. No offer or outside buyout interest prompted the move, according to the two people.
Tim Dattels, a BlackBerry director and senior partner at private-equity firm TPG Capital, is leading the committee evaluating the company’s options.
Heins was counting on the introduction of the BlackBerry 10 operating system and a range of new phones to revive the company’s fortunes. So far, that hasn’t happened. Sales of the new Z10 touch-screen phone missed analysts’ estimates by almost a million units last quarter, contributing to a surprise loss. The company is projecting more red ink for the current period.
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