Smartphone maker Blackberry has dropped plans to sell itself to shareholder Fairfax Financial Holdings Limited, and says it will instead raise $1bn to finance its turnaround plans.
In September the board accepted a provisional buy-out offer from Fairfax Financial which would have seen the firm taken private, allowing it to restructure without the scrutiny associated with its stock market listing.
However there have been rumours that Fairfax was struggling to raise the finance needed for the buy-out.
On Monday Blackberry’s board announced the sale was off, and that Fairfax would instead provide $250,of the $1bn being raised.
The transaction is expected to be completed within the next two weeks.
Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry’s Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry.
Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead Director and Chair of the Compensation, Nomination and Governance Committee and Thorsten Heins and David Kerr intend to resign from the Board at closing.
In addition, Mr. Heins will step down as Chief Executive Officer and Mr. Chen will serve as Interim CEO.
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” said Barbara Stymiest, Chair of BlackBerry’s Board.
“The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders.
“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”