The future of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has hung in the balance for months, and many speculated that a break-up would be the only way the struggling company would be able to find buyers. But a report from Greg Roumeliotis and Euan Rocha of Reuters indicates that a break-up was unacceptable to the company’s management.
Microsoft, Apple, others expressed interest
Apparently BlackBerry was aiming for an all or nothing deal, but Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Lenovo Group Ltd. (PINK:LNVGY) (HKG:0992) had other ideas. All three of them were said to have expressed interest in buying part of BlackBerry, and all three were rejected because they didn’t want to buy the entire sinking ship.
Below is our 13F roundup for some high profile hedge funds for the three months to the end of March 2021 (Q1). Q1 2021 hedge fund letters, conferences and more The statements only include equity positions as 13Fs do not include cash and debt holdings. They also only include US equity holdings. Funds may hold Read More
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s board reportedly turned down the piecemeal proposals because it didn’t think they were in the interests of all of the interested parties, including shareholders, employees, suppliers and customers.
BlackBerry’s patents were of interest
Specifically, Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) were said to have expressed interest in buying BlackBerry’s patent portfolio. The two companies had teamed up with BlackBerry in 2011 to buy the intellectual property which belonged to Nortel, a now defunct Canadian telecom company. BlackBerry was also said to have discussed selling parts or even all of itself to Cisco Systems, Inc. (NASDAQ:CSCO), Google Inc (NASDAQ:GOOG), Lenovo Group Ltd. (PINK:LNVGY) (HKG:0992) and others.
It is unclear whether BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) rejected these offers during the three-month strategic review or whether it was before.
BlackBerry abandoned plans to find a buyer
BlackBerry’s strategic review process ended on Monday without finding a buyer. Its largest shareholder Fairfax Financial had made a tentative offer along with a group of other investors. That offer was dependent on whether financing could be lined up and the company could pass the due diligence process. The offer was never firmed up, and there were reports that it was because financing for the deal could not be secured.
Instead of the buyout, BlackBerry announced it was issuing $1 billion in convertible notes to a group of investors. The company’s board reportedly felt that the notes provided certainty in the near term and the best opportunity to turn things around.
Why BlackBerry didn’t want to break up
According to Reuters’ sources, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) saw too many liabilities in breaking itself up. There would have been liabilities in supplier commitments if the company decided to wind down some parts of its business. Also the monetization of its patent portfolio would have been affected by those liabilities, particularly because some of those patents are closely intertwined with some of BlackBerry’s assets.
The board was also said to be concerned that a deal which involved foreign companies would be carefully probed by the Canadian government through a long review process, which would make it more difficult for the company to stop its customer losses.