It has nearly been 6 weeks since BlackBerry’s board of directors entered into an agreement with a consortium of investors led by Fairfax Financial. As a reminder, here is what that agreement said in plain English:
- They take BlackBerry private for $9 per share. The general agreement is for Fairfax, and its partner investors, to take BlackBerry off the public market by purchasing all shares it doesn’t already own for $9 cash. This means regular shareholders (like me) trade the shares for cash, and BlackBerry would cease to trade on a stock exchange. It would become a private Canadian technology corporation.
- The offer was not fully funded at the time. Fairfax was seeking funding from BoA Merrill Lynch, and BMO Capital Markets. Without funding, Fairfax can’t complete this deal. One of Canada’s largest pension plans, AIMCO has already gone on record stating that they aren’t participating in any deal.
- There is a due diligence period. Fairfax is entitled to conduct due diligence before firming up its offer. The due diligence is expected to be complete by November 4th, which is Monday. But there is no hard and fast rule saying anything has to be done by then.
- BlackBerry can shop itself to other buyers during the due diligence period. The board of directors would not be doing its fiduciary duty if it didn’t try to get he highest possible price for the stock. We’ve seen hits of interest from other organizations and people. These include private equity firm Cerberus Capital Management, co-founder of RIM Mike Lazaridis, and of course the latest gossip ... Facebook (or for that matter any technology company that may benefit from owning BlackBerry).
So what actually happens on November 4th?
We don’t know what’s going to happen, but there are a number of possibilities. Let’s run through them.
First, Fairfax could firm up its deal by announcing it is satisfied with due diligence and has secured the necessary funding. This is a very real possibility, considering how vocal Prem Watsa has been in the press about his seriousness in taking BlackBerry private.
Fairfax could also amend the terms of its deal. If nobody else is interested in bidding, it doesn’t seem like they need to pony up $9 per share. The stock is trading well under that price, and investors like Fairfax are not in the business of charity or “saving” companies. They’re in the business of making money.
Another one of the bidders could also step up to the plate and make an offer to the board of directors. If and when this happens, we’ll hear about it because the competing bidder would certainly disclose its offer, and attempt to convince investors that the offer is superior. Standard stuff. Given the explosion in cross-platform BBM users we’ve seen in the last week it’s possible that somebody will see BlackBerry as more valuable now. Certainly the stock market doesn’t seem to think so, though.
We could also see some sort of deal crystallize sooner, as in today, tomorrow, or sometime over the weekend. Or nothing could happen. That’s another real possibility. There is no firm rule that says Fairfax has to conclude due diligence by November 4th. We’ve been getting very used to all things BlackBerry related being late. Perhaps a go-private transaction gets delayed too. Perhaps the board of directors of BlackBerry pushes out the finalization of a firm deal in order to give interested bidders more time, in light of the successful BBM rollout.
Those are the most likely possibilities for Thursday. If you had to make a bet, which option would you bet on?