Mobile pioneer Blackberry crumbles

Oliver Smith
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BLACKBERRY, the once-great pioneer of the mobile industry, said last night that it has agreed a tentative deal to be taken private for just $4.7bn (£2.9bn).

The news came as rival Apple revealed record sales of its new iPhone 5s and 5c models – raking in more than $4.9bn in just three days as customers rushed to snap up 9m of the phones over the weekend.

Yesterday’s offer for BlackBerry, led by its largest shareholder Fairfax Financial Holdings, amounts to just $9 a share.

At its peak in 2008 BlackBerry was valued at more than 16 times that amount, with shares touching a record high of C$149.90 in June that year – just 12 months after the first ever iPhone was launched.

Fairfax, led by high-profile investor Prem Watsa, will now have until 4 November to conduct due diligence on the deal, while BlackBerry will remain officially on the market to rival bids.

“We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world,” said Watsa yesterday.

The members of the consortium were not revealed last night, although Canada’s pension funds are seen as likely participants.

BlackBerry shares climbed one per cent to just below the offer price after the announcement, but stayed well below last week’s highs of close to C$11.

The firm warned last Friday that the company’s growing inventory of unsold devices would lead to losses of more than $900m for the quarter, and that staff layoffs are imminent, wiping 17 per cent off its stock price.

“The profit warning on Friday was a clear indication of the extreme difficulties BlackBerry faces in the hyper-competitive mobile devices business,” said analyst Ben Wood of CCS Insight.

“This latest bid underlines the seriousness of the company’s situation. By going private, the structure and purpose of the company can be redefined behind closed doors,” he added.

As Blackberry’s turbulent ride on the public markets moved closer to coming to an end, Apple chief executive Tim Cook was lauding his firm’s latest launch as its “best yet”, far exceeding the 6m iPhone 5’s that Apple sold in the same period last year.

Shares in the tech giant jumped more than 4.6 per cent after it said the blockbuster sales meant fourth quarter revenues would be towards the high end of previous forecast for $34bn-$37bn.