Blackberry co-founders mull bid for struggling smartphone maker

PUBLISHED : Friday, 11 October, 2013, 11:21am
UPDATED : Friday, 11 October, 2013, 11:22am

BlackBerry co-founders Mike Lazaridis and Douglas Fregin are considering a bid to buy the struggling smartphone maker, according to a securities filing on Thursday, raising the prospect of an alternative to a US$4.7 billion offer led by its top shareholder.

The filing did not indicate whether the pair were planning to join or to present an alternative to a tentative US$9-a-share bid by a group led by Fairfax Financial. Fairfax, which is headed by financier Prem Watsa, has not yet identified other members of the group.

Lazaridis and Fregin together control some 8 per cent of BlackBerry, the filing said. That compares with roughly 10 per cent controlled by Fairfax.

Excluding Fregin’s shares, Lazaridis controls 5.7 per cent of BlackBerry, or about 60,000 shares more than he did at the end of last year, according to Thomson Reuters data.

Lazaridis, who until early last year was one of BlackBerry’s co-chief executives and co-chairmen, appears to be considering “the widest range of options possible”, BGC Partners technology analyst Colin Gillis said.

“He’s going to talk to people by himself; he’s going to talk to Prem; he’s going to talk to everybody,” said Gillis.

Fairfax declined to comment on the Lazaridis filing, which noted that while Lazaridis and Fregin could make an offer, they could opt to take other steps, including selling their shares.

[Lazaridis is] going to talk to people by himself; he’s going to talk to Prem; he’s going to talk to everybody
Analyst Colin Gillis

BlackBerry declined to comment specifically on the news, repeating an earlier statement that it is conducting a robust review of alternatives and would only say more if a deal is done or the strategic review is otherwise ended.

Investors have been sceptical the Fairfax offer will garner the financing needed, and Gillis noted that Lazaridis’ interest faces the same challenge because the founders, for now, do not have any funding lined up.

Analysts believe both parties could look to secure financial backing from one or more of Canada’s deep-pocketed pension funds. A foreign buyer for Blackberry faces a stringent review under the national security clause of the Investment Canada Act, as BlackBerry’s secure servers handle millions of confidential corporate and government e-mails every day.

Industry executives, lawyers and analysts say that could limit the pool of foreign entities that may be allowed to acquire all, or at least certain parts of the company.

In sign of investor scepticism, BlackBerry’s stock has traded well below Fairfax’s US$9 offer price since the bid was announced last month, days after BlackBerry warned it would report slumping sales, a big loss and job cuts.

News of Lazaridis’ interest pushed shares in the company a bit higher. The stock turned positive after the news and closed on Thursday up 1.1 per cent at US$8.20 on the Nasdaq. But it has fallen more than 20 per cent since the company warned on its earnings.