"Bizarre" sale process threatens to break up BlackBerry

A strange bidding procedure could dismantle the smartphone maker


Published October 8, 2013 3:42PM (EDT)

BlackBerry Ltd. will probably be broken up amid a “bizarre” bidding process that makes it hard to value the smartphone maker, according to a Canadian pension fund that’s considering an offer.

“It’s the most bizarre sales process I’ve seen in a long time,” Alberta Investment Management Corp. Chief Executive Officer Leo de Bever said in a phone interview yesterday. “We’re looking at it but nobody’s come to us with a proposal that makes any sense.”

BlackBerry has dropped 11 percent to $8 a share since Fairfax Financial Holdings Ltd. announced last month a tentative bid to take the company private for $9. Investors are betting Fairfax, the Canadian insurer that is BlackBerry’s biggest shareholder, will struggle to find backers or financing for its takeover of the Waterloo, Ontario-based smartphone company by the Nov. 4 deadline.

De Bever, 65, said there are discussions among investors about valuing particular BlackBerry units and a split of the company may be in the cards.

“We were looking at the individual assets because that’s how you understand the whole company,” de Bever said. “But it doesn’t necessarily mean that we want to take a carving knife to BlackBerry. The odds are that’s what’s probably going to happen.”

Alberta Investment, which manages C$69 billion ($67 billion) for 310,000 current and retired government workers in Alberta, would be more willing to consider an investment in BlackBerry if there was a strategic buyer such as Google Inc. involved, de Bever said.

Unit Values

Aimco, as the fund is called, also wants to see the value of the company’s units disclosed, and a business plan for developing those units in the future, de Bever said from Edmonton, Alberta. Fairfax, led by CEO Prem Watsa, hasn’t named any backers for its $4.7 billion bid and hadn’t secured financing at the time the proposed offer was announced.

Paul Rivett, president of Toronto-based Fairfax, didn’t immediately respond to phone calls and emails today seeking comment.

“We do not intend to disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives,” Lisette Kwong, spokeswoman at BlackBerry, said in an email statement.

Understands Assets

“The driver will have to be someone who really understands the assets,” de Bever said. “You can be sure that pretty much all the usual suspects are looking at this. Now how seriously -- that’s the question. Looking and doing something are two totally different things.”

If pension funds were to invest in BlackBerry, it would probably be in a coalition with other private equity investors, he said. He declined to name other investors in talks with Fairfax and BlackBerry.

BlackBerry has drawn interest from private-equity firm Cerberus Capital Management LP, which is looking to sign a confidentiality agreement with BlackBerry that would give it access to additional financial data, a person with knowledge of the matter told Bloomberg last week.

“Usually somebody comes to you and says ‘this is what we have in mind, we’ve got an operational partner for this, this is how we’re going to deal with this asset and that constraint and this possibility,’” de Bever said. “There’s detailed business plans. Sometimes we initiate it. On this one, it’s a tough nut.”


--Editors: David Scanlan, Jacqueline Thorpe

To contact the reporter on this story: Katia Dmitrieva in Toronto at edmitrieva1@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net