The fate of Canadian smartphone manufacturer, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) as it explores strategic alternatives to enhance value and increase scale to step up the deployment of BlackBerry 10 may be in the hands of Prem Watsa, its largest shareholder.

BlackBerry Ltd

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is expected to initially attract the interest of Canadian pension funds, private equity firms, and other technology companies.  Richard Steinberg, International Chair of Fasken Martineau’s Securities and Mergers & Acquisitions Mergers Group opined that Watsa’s support is critical to complete any buyout deal.

Steinberg also noted that Watsa’s firm, Fairfax Financial Holdings Ltd (TSE:FFH) owns a 10% stake in the smartphone manufacturer. He said, “I would imagine that if Fairfax says they are against a particular deal; that would carry a lot of weight.”

Blackberry LBO supported by Watsa and Fairfax

Watsa is a strong supporter of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Back in April, he estimated that the fair value of the shares of the smartphone manufacturer was $40 per share. Watsa resigned from the board of the BlackBerry to prevent conflict of interest. There had been speculations that he is putting together a group to acquire and take the company private.

Some people in the investment community believe that private equity firms like Bain Capital LLC, KKR & Co. L.P. (NYSE:KKR) and Carlyle Group LP (NASDAQ:CG) are potential buyers. Technology giants such as Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), Hewlett-Packard Company (NYSE:HPQ), and Microsoft Corporation (NASDAQ:MSFT) might also be interested in acquiring the Canadian smartphone manufacturer because its security services solutions and patents are valuable.

Leo De Bever, CEO of Alberta Investment Management Corp., one of the largest pension funds in Canada, expressed his interest to explore any potential agreement with BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Mike Wiseman, CEO of Canadian Pension Plan, also said that his firm might invest in BlackBerry if it goes private.

BlackBerry sale may attract large pension funds and tech giants

Jefferies analysts Peter Misek, Jason North, and Billy Kim believe that a leveraged buyout (LBO) is possible, and anticipate that some of the largest Canadian pension funds might join BlackBerry’s sale process. They projected that interested buyers could possibly bid for $15 per share.  It is interesting to note that Fairfax Financial Holdings Ltd (TSE:FFH) paid an average price of $17 per share to build its stake in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).

Ross Healy, portfolio manager at MacNicol & Associates commented, “I don’t think (Watsa) is going to look at the various bidders and make qualitative choices. He’s going to be making quantitative choices (based on who pays top dollar).”