BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is headed toward a $9 per share acquisition in the coming months if things at Fairfax Financial Holdings Ltd (TSE:FFH) go according to plan. The company signed a letter of intent on the acquisition earlier this week. That means that an acquisition is likely, but it is by no means certain.
A new report from Evercore Research analysts Mark McKechnie and Zachary Amsel project that if the deal does not go through shares in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) could fall as low as $6. The company has almost entirely stopped functioning as a smart phone maker at this stage and it needs money in order to do business.
Joel Greenblatt Owned Hedge Fund On Why Value Investing Isn’t Working Now
Acacia Capital was up 12.27% for the second quarter, although it remains in the red for the year because of how difficult the first quarter was. The fund is down 14.25% for the first half of the year. Q2 2020 hedge fund letters, conferences and more Top five holdings Acacia's top five holdings accounted for Read More
Stopping Blackberry acquisition
There are a few things that could put an end to the Blackberry Ltd (NASDAQ:BBRY) acquisition. Some of them are unlikeable and boring. There is little chance that regulators will block Prem Watsa’s attempt to take over the company, and he has been on the board at BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) for a long time meaning due diligence is unlikely to turn up anything profound.
The best halt in the acquisition for shareholders would be the emergence of a competing offer for the company. The Fairfax Financial Holdings Ltd (TSE:FFH) offer for the company seems to have been a little low, but BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) burns a large amount of cash.
Another company looking to take Blackberry off of the market could push the price up for shareholders, and a bidding war could even emerge, though it seems unlikely. Of all of the candidates likely to take on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) none emerged as willing participants in the selling process. Now that there is a minimum price it may be easier to value the company.
This year has seen a great many activist investors get involved at companies and do their best to make a return off of their investment. Carl Icahn got involved at Dell Inc. (NASDAQ:DELL) because he believed the privatization offer was too low. He, or any other activist out there, could get involved at BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and try to drum up support to block the acceptance of this deal.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shareholders may be simply too broken down to choose to fight on for their stock. $9 isn’t a good price for what many paid for the security, but it’s more than the $0 that could be offered if the company goes bankrupt.