Cerberus Capital Management is seeking a confidentiality agreement that would allow it to examine the books and internal operations of BlackBerry, a person briefed on Cerberus’s plans said on Wednesday.
It was not clear whether the move would ultimately lead to a bid for BlackBerry, which reported a $1 billion quarterly loss last week largely because its new line of smartphones flopped. The company has already agreed to a preliminary and conditional offer from its largest shareholder, Fairfax Financial Holdings of Toronto. While it remains free to look for a better offer, BlackBerry will have pay Fairfax $157 million if it accepts another bid before Nov. 4. Fairfax can walk away without penalty.
Fairfax intends to bring only its 10 percent holding in BlackBerry to its proposed transaction, which values the company at $4.7 billion. Skepticism about Fairfax’s ability to gather other investors and borrow billions of dollars more for what many view as a risky purchase has kept BlackBerry’s shares well below the $9-a-share bid from Fairfax.
BlackBerry’s stock sank further in early trading on Wednesday. Financial filings released on Tuesday night indicated that the company is now in trouble in developing markets, previously its last stronghold, and that it would most likely run up $400 million in costs during its final two quarters as it lays off 40 percent of its remaining staff, or about 4,500 people.
After The Wall Street Journal first reported Cerberus’s interest, BlackBerry’s shares picked up and closed at $7.96, up 0.5 percent.
The breakup fee for Fairfax aside, it may be difficult for Cerberus to justify an offer higher than the one proposed by Fairfax. At least two analysts have said over the last few days that $9 a share is excessive.
BlackBerry’s board began a strategic review in August that included the sale of the company among its options. Prem Watsa, the chairman and chief executive of Fairfax, an insurance and investment company, stepped down from BlackBerry’s board at that time. He and the company have repeatedly declined to identify who will join the consortium. But Mr. Watsa has told some news organizations that he intends to close a deal and that he will stick with his offer.
It is not known whether any other investors beyond Fairfax and Cerberus have expressed any interest. There is widespread speculation in Canada that Mike Lazaridis, BlackBerry’s co-founder and its former co-chairman and co-chief executive, may make a bid. Mr. Lazaridis still holds about 5.7 percent of BlackBerry’s shares.
