- POSTED: 03 Oct 2013 10:55
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Troubled Canadian smartphone maker BlackBerry, is being eyed by private equity firm Cerberus Capital Management which specializes in distressed companies and was a lead investor in Chrysler before the automaker's collapse
New York: The private equity firm Cerberus Capital Management, is said to interested in taking over BlackBerry.
A source familiar with the matter said Wednesday that the big investment group is preparing to sign a confidentiality agreement to examine the finances of the Canadian firm for a possible counter-offer to a US$4.7 billion buyout plan agreed to last month.
BlackBerry said on September 23, that it had signed a letter of intent for the buyout led by Fairfax Financial Holdings Limited, which translates to US$9 a share.
The deal is subject to due diligence by Fairfax and allows BlackBerry to consider other offers.
Fairfax, a Canadian firm headed by billionaire Prem Watsa, is already BlackBerry's largest shareholder with approximately 10 percent of its shares.
Watsa resigned from BlackBerry's board in August when it announced a search for a financial white knight.
Some analysts have said they do not believe the Fairfax buyout will take place, and the move was made to elicit other offers.
BlackBerry shares have been trading below the Fairfax offer of US$9, and on Wednesday edged up slightly to close at US$7.96.
An analysis released Wednesday by the research firm Trefis, said however, that BlackBerry is worth the US$4.7 billion offered by Fairfax, when adding up the value of its services, hardware and software operations and cash on hand.
BlackBerry had some US$2.6 billion in cash at the end of the past quarter.
New York-based Cerberus, which specializes in distressed companies, manages some US$20 billion in assets, according to its website.
It was a lead investor in Chrysler before the automaker's collapse in the financial crisis of 2008-2009.
While BlackBerry helped create a culture of mobile users glued to smartphones less than a decade ago, many have since moved to iPhones or devices using Google's Android software.
According to International Data Corporation, BlackBerry's global market share had slipped to 3.7 percent in the second quarter, the lowest since tracking began.
Android accounts for nearly 80 percent.
A survey by Kantar Worldpanel ComTech said BlackBerry captured just 2.4 percent of sales across the big five European markets and 1.8 percent in the United States in the three months ending in August.
The company, formerly known as Research In Motion, unveiled a new corporate name and a new platform in January as it sought to regain momentum, but its most recent numbers suggest this has been a failure.
BlackBerry still has some 70 million subscribers worldwide, but most of these are using older handsets, with the newer devices on the BlackBerry 10 platform failing to gain traction.
Last month, the company announced it was laying off 4,500 staff -- or one-third of its global workforce -- after a dismal launch of new smartphone models earlier this year.
BlackBerry lost US$965 million in the past quarter as sales plummeted.