The auction for BlackBerry Ltd. heated up Friday, as three potential suitors discussed joining forces for a bid ahead of a Monday deadline for offers.
After one of BlackBerry’s largest shareholders struck a preliminary buyout deal with the beleaguered smartphone maker in September, BlackBerry’s advisers set about shopping it to a wider group of possible buyers in an accelerated sales process designed to arrest BlackBerry’s downward spiral.
In the latest development, Mike Lazaridis and Doug Fregin, who co-founded the company in 1984 but no longer work there, have been in talks to mount a joint bid with mobile-phone chip maker Qualcomm Inc. and Cerberus Capital Management LP, according to people familiar with the matter.
But in a sign that the sales process is far from a frenzied auction, Fairfax Financial Holdings Ltd., which struck the preliminary deal with Waterloo, Ontario-based BlackBerry, still hasn’t lined up financing for its bid, another person said.
Fairfax has been seen as the bidder to beat, given its tentative deal and the fact that the firm, led by former BlackBerry director Prem Watsa, already owns 10% of the company. The preliminary Fairfax deal values BlackBerry at $9 a share, or $4.7 billion. Fairfax said then that it was seeking financing for the deal. As of Friday, it had still not secured financing, according to a person familiar with the matter, and it was unclear whether it would by the deadline.
BlackBerry’s stock price suggests investors are skeptical that a deal will be reached at $9 a share, either with Fairfax or someone else. The stock has been trading well below that level, and Friday closed at $7.77 on the Nasdaq Stock Market—giving BlackBerry a market value of just $4 billion.
BlackBerry and its advisers put a for-sale sign on the company after years of devastating market-share losses to competitors including Apple Inc. and Samsung Electronics Co. According to market researcher IDC, BlackBerry, which once controlled more than half of the U.S. smartphone market, recently had just over 2%. The company and its advisers had hoped to run a speedy sales process that would be completed around now, people familiar with the matter have said. It is still far from clear, however, whether they will achieve that.
The trio considering a joint bid—which might not materialize—each come to it from very different vantage points.
Qualcomm, with a market capitalization of about $120 billion, is the largest maker of chips that manage cellular communications in smartphones, and supplies processors that run software on mobile devices. The San Diego-based company also licenses communications patents to handset makers, generating a large stream of royalty revenue.
Qualcomm had $11.5 billion in cash, liquid investments and short-term securities as of June 30. One motivation for investing in BlackBerry could be to keep a customer afloat.
Another could be access to patents; besides its own intellectual property, Qualcomm licenses rights to other companies’ patents under some circumstances. At the same time, having an equity stake in one handset maker could create tensions with other customers. Users of Qualcomm communications chips include Apple and Samsung.
Cerberus has made its name investing in distressed companies. A BlackBerry bid wouldn’t be the first foray into Canada for the New York-based firm. In 2004, the firm invested in troubled airline Air Canada.
At the time, the airline was restructuring under bankruptcy-court protection. Two years later, Air Canada’s parent company launched an initial public offering and Cerberus exited its stake by 2009.
Messrs. Lazaridis and Fregin, who publicly declared their exploration of a potential BlackBerry deal last month, together own about 8% of the company. As Cerberus and Qualcomm could lend them financial firepower, their stock could lend a big existing equity stake as a platform for a possible offer.
Other parties that have been considering a bid for BlackBerry include China’s Lenovo Ltd., people familiar with the matter have said.
Lenovo was still in the hunt for BlackBerry, a person familiar with the matter said Friday. BlackBerry executives recently met with Facebook Inc. officials to discuss a possible bid by the social-networking company for the smartphone maker, according to people familiar with the matter. It isn’t clear what, if anything, came of the meeting.
–Don Clark contributed to this article
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