Private equity firm Cerberus Capital Management LP gained access to BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s financial records after signing a nondisclosure agreement with the company, according to a report from Bloomberg based on information obtained from a source familiar with the situation.
Cerberus to purchase BlackBerry’s business
The report indicated that Cerberus Capital Management is considering purchasing the entire business of the struggling Canadian smartphone manufacturer. The private equity firm is reviewing BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s financial situation to be able to create a proposal for the company.
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The source, who requested anonymity because the deliberation was private, opined that it may not happen and that Cerberus Capital Management might end up not pursuing a deal. According to Bloomberg, Peter Duda and Adam Emery, spokespersons for the private equity firm and the Canadian smartphone manufacturer respectively, declined to comment on the issue.
According to the source, Cerberus Capital Management believed that turning BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) around is doable instead of selling its assets piecemeal.
Cerberus competing with Fairfax
The private equity firm will compete with a consortium of buyers led by Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH), if it decides to acquire BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Fairfax Financial offered to acquire all of the shares of the company it does not yet own for $9 per share, or a total of $4.7 billion.
Last week, BlackBerry’s co-founders Mike Lazaridis and Doug Fregin also indicated their interest in taking over the company. Based on a regulatory filing with the Securities and Exchange Commission (SEC), Lazaridis and Fregin plans to submit a joint bid for all the shares of smartphone manufacturer they do not currently own. They indicated that they might purchase the shares by themselves or with other interested investors. The co-founders engaged the services of Goldman Sachs Group (NYSE:GS) and Center View Partners LLC to review alternatives.
BlackBerry to explore strategic alternatives
The management of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) decided to explore strategic alternatives to boost its profitability, such as going private or selling the company after its new BlackBerry 10 devices failed to attract consumers and regain market shares. In the second quarter, the company recorded $965 million losses or $1.84 per share, primarily due to unsold inventory of new smartphones.
Cerberus Capital Management specializes in distressed assets. The private equity firm has $20 billion assets under management. The company succeeded in its investment in Chrysler Group in 2007, and it recently led a group of investors that acquired grocery store chains for SUPERVALU INC. (NYSE:SVU).