Fairfax's Watsa Confident BlackBerry Bid Will Succeed

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BlackBerry Ltd Smartphones And U.K. Headquarters As $4.7 Billion Dollar Buyout Deal Agreed With Fairfax Financial Holdings Ltd
Chris Ratcliffe/Bloomberg via Getty Images
By Alastair Sharp

TORONTO -- Fairfax Financial Holdings chief executive Prem Watsa says he is confident the consortium he leads can find the money to fund its $4.7 billion bid for smartphone maker BlackBerry Ltd.

"We wouldn't put our name to such a high-profile deal if we didn't feel confident that at the end of the day that our due diligence would be fine and we'd be able to finance it," Watsa said in an interview Wednesday.

The Canadian-led consortium put in its $9 a share bid for BlackBerry (BBRY) on Monday, arguing that the troubled company would have better chances as a private entity, away from Wall Street's constant gaze. The company pioneered mobile email communications but has lost ground to Apple's (AAPL) iPhone and other snazzier rivals,

BlackBerry shares closed a full dollar below the bid price on the Nasdaq on Wednesday, indicating that investors were skeptical the deal would succeed. The stock edged up to $8.05 in aftermarket trade.

"Short term these things fluctuate, there is speculation one way, there's speculation the other way," Watsa said of the movement in BlackBerry's share price. "We never pay too much attention to the marketplace."

Fairfax is BlackBerry's biggest shareholder, and Watsa said he didn't expect Fairfax would need to contribute more than its existing stake of about 10 percent to the buyout bid. He said the bid was led by Fairfax and Canadian funds, but not restricted to them.

"BlackBerry is one of Canada's great success stories," he said. "There is no question it's fallen on hard times recently, but we have every confidence it will be successful again. We're putting a consortium together to make sure that that takes place."

The group has until November 4 to conduct due diligence, in which time BlackBerry can also seek out other buyers.

%VIRTUAL-article-sponsoredlinks%Asked if the bid price could be reduced, Watsa said he didn't expect that to happen unless the review of BlackBerry produced negative surprises. He said Fairfax had never changed the terms of a deal in 28 years.

Watsa declined to name any participants in the group, citing confidentiality agreements, or to comment on questions around possible collateral the group could use to secure financing, or on the possibility of bridge financing that could be repaid using BlackBerry's existing cash pile.

He said the group did not include any strategic players, but that one or two technology companies could possibly join.

Watsa, who stepped down from BlackBerry's board when the company said it was looking for buyers in August, said the "timing was right" for a deal after BlackBerry warned Friday that it would post a heavy loss in its fiscal second quarter ended Aug. 31 and cut more than a third of its workforce.

"For the benefit of the company's customers, its employees, it was the right time to do the deal," he said.

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