BlackBerry looking at private future: report
10 August 2013
BlackBerry Ltd is considering the possibility of going private, as the smart phone maker battles to revive its fortunes, Reuters reports citing several sources familiar with the situation.
Chief executive Thorsten Heins and the company's board are giving thought to taking the company private in a bid to gain some breathing room to fix its problems away from the public eye, according to the report.
One of the sources said on Thursday that there was a change of tone on the board. The sources, however, denied any deal was imminent, and BlackBerry too had not launched any kind of a sale process, they said.
According to commentators, even if it tried, BlackBerry would find it hard to come up with a buyer and the funding to go private. With the company's bottom line in the red and subscribers deserting, private equity firms and other buyers might not want to step in.
The company's shares have plunged over 19 per cent this year, with its market value down to $4.8 billion, from $84 billion at its peak in 2008.
BlackBerry's openness to consider a deal comes as a radical shift in thinking at the smart phone maker. Till recently, BlackBerry, known earlier as Research in Motion, a pioneer in providing secured emails on handheld devices, had firmly pushed for staying independent, pinning hopes for a turnaround on its latest smart phones.
Meanwhile, The Vancouver Sun reported that BlackBerry shareholders had reacted strongly yesterday to rumours that the smart phone maker's chief executive and board of directors could take the company private. According to the newspaper, a transition of the kind could prove extremely expensive.
Privatisation of the Waterloo, Ontario-based firm would seem to suit executives in BlackBerry's board room, as it would shield them from persistent shareholder and analyst scrutiny, but was not likely, according to the newspaper.
The cost of going private at its current share price, could be around $5 billion and $7 billion, and those were the more conservative estimates.
At around the stock's peak in 2008, the smart phone maker was valued at about $84 billion. Over the past few years, the company's stock price had tanked heavily with the growth in popularity of market players such as Apple's iPhone and smart phones on the Android operating system.
BlackBerry yesterday gained 5.6 per cent, or 54 cents, to $10.05 on the Toronto Stock Exchange, while the stock closed ahead 53 cents to $9.76 in New York.