BlackBerry Ltd (BBRY) Will Not Break On Fairfax Financial Wheel

The news is out. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is planning on being acquired by Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF). The deal will value the company at $9 per share and is reliant on the approval of regulators and due diligence, among other factors. The question for fans of BlackBerry is what Fairfax head Prem Watsa wants to do with the company.

BlackBerry Ltd (BBRY) Will Not Break On Fairfax Financial Wheel

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) expects to sign a deal confirming the acquisition on November 4. Assuming the deal goes through as planned, there will be a lot less news about the company available outside of Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) investor letters. At least one analyst is certain that BlackBerry will not be broken by the process.

Keeping BlackBerry whole

According to a BBC report, Canadian technology analyst Carmi Levy thinks that Prem Watsa plans to keep BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) in one piece. Levy told a BBC radio program that Fairfax Financial “is one private investment company that is not interested in breaking the company up for parts.

That leaves questions about what Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) does want to do with the failing smartphone maker. Shares in the company rose by about 1 percent on Monday after the announcement of the deal. Fairfax appears to have gotten a good deal on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) assets, but if it isn’t planning on selling them, they might not be worth all that much to Fairfax shareholders.

BlackBerry value for Fairfax

If Fairfax Financial Holdings Ltd (TSE:FFH) is planning on keeping BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) as a going concern, it’s going to have trouble. The company is cutting about 40 percent of its staff, and it’s still leaking money. The firm has several opportunities, but none of them seem particularly exciting.

It looked like BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) would be bought as a strategic piece of the smartphone market, or broken up so it was more valuable for shareholders. Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF)’s move to buy the business might make it less valuable to shareholders, and more difficult to turn into a thriving concern.

There’s a tough road ahead for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) as the company heads toward an unknown future. If Prem Watsa is planning on making the company a thriving smartphone business once again, instead of scrapping it for parts, he has his work cut out for him.

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Paul Shea
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