BlackBerry sold for $4.7bn

24/09/2013

BlackBerry has been sold to a private equity consortium for $4.7bn (£2.9bn), as the struggling phone maker looks to turn around its fortunes.

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The announcement comes days after the former smartphone market leader warned it would make a quarterly operating loss of nearly $1bn and revenues would fall well short of analysts’ estimates.

The Canadian-based firm said it would cut 4,500 jobs, amounting to 40% of its total workforce.

The purchase was led by a led by Toronto-based Fairfax Financial, which already owns 10% of Blackberry and would pay other investors $9 per share as part of the deal.

The deal is subject to due diligence and regulatory approval. BlackBerry shares opened at $8.22 on Monday.

The offer was announced by Prem Watsa, the chairman of Fairfax. He was a member of the BlackBerry board until the company announced it was exploring “strategic alternatives” last month and his departure was seen as a signal that Fairfax would come forward with a bid.

He said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.”

Barbara Stymiest, chairman of the BlackBerry board and part of a special committee that sought a buyer for the business, said: “The special committee is seeking the best available outcome for the company’s constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal.”

BlackBerry formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008. It was the global smartphone leader before Apple debuted the iPhone in 2007.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

As recently as 2011 BlackBerry sold more than 14% of all smartphones in the world. In the second quarter of this year, however, its share had collapsed to less than 3%, according to the industry analysts IDC. It sits in fourth place overall, behind Google Android devices, the iPhone and Microsoft’s Windows Phone.

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