Wasn't sure to put this here or in the Stocks thread. Oh well:
http://www.bloomberg.com/news/2013-1...buying-it.html
BlackBerry Was Just Kidding About Someone Buying It
You have to admire BlackBerry's tireless efforts to put a brave face on things. In September, after
announcing disastrous earnings and firing a third of its employees, BlackBerry had the bright idea of
telling everyone that Fairfax Financial Holdings was going to buy it at $9 a share. That was sort of in the ballpark of maybe being kinda true, but it depended on Fairfax (1) getting financing and (2) not coming to its senses. Fairfax had until today to come to its senses and
guess what?
BlackBerry Ltd. abandoned plans to sell itself and began searching for a new chief executive officer after a $4.7 billion takeover plan collapsed, sending shares of the struggling smartphone maker plunging.
Fairfax Financial Holdings Ltd., BlackBerry’s largest investor, walked away from its bid for the company, opting instead for a $1 billion bond deal and a management shakeup.
So instead of stumping up $4.7 billion in its own and others' money to buy BlackBerry, taking all of the equity upside and downside and controlling the company, Fairfax will stump up $1 billion of its own and others' money -- only $250 million of its own --
to take a lot of the equity upside, little or none of the downside, and basically control the company. That is a much better deal for Fairfax: It gets most of the benefit of buying BlackBerry, with considerably less of the risk.
Instead of raising $4.7 billion to buy the company, Fairfax is raising $1 billion -- only $250 million of which is its own money, the rest coming from co-investors -- to buy into the company in a senior position. Fairfax will still get equity upside above $10, the conversion price of the bonds
, but it's ahead of the common shareholders if BlackBerry ever goes bankrupt which, I mean, you know, at some point that is a thing you might want to talk about
.