BlackBerry may be a firm in its death throes, as it makes further deep cuts and lobbies for foreign takeover laws in Canada to be relaxed.
The company was reported last week to have laid off more than half of its salesforce, on both the consumer and enterprise sides. The firm itself said it had laid off a ‘small number of employees’ in the latest round of its long-running cost reduction program.
Meanwhile, BlackBerry’s largest shareholder, Fairfax Financial Holdings ‘ which has a 10% stake ‘ is said to have approached several potential buyers, while Fairfax’s CEO Prem Watsa has left the BlackBerry board to avoid conflicts of interest. The company may be trying to get a group of Canadian pension funds or other institutions to invest, which would avoid foreign takeover red tape.
In August, the handset maker formed a special board committee to consider strategic alternatives such as ‘possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions’. But the past two years have been a saga of reported acquisitions, but one by one, the likely predators have dropped out of the picture, at least where the devices are concerned. The most recent was Huawei, which said it had no plans to bid for BlackBerry.
A more likely approach could come from a company interested in the still-strong enterprise assets, but that would almost certainly mean break-up, and possibly the death of the smartphone side of the business ‘ or its survival in a niche. Microsoft, Oracle and IBM have been whispered as possible suitors. There could also be bids from financial organizations such as Canada Pension Plan Investment Board or Bain Capital, and a spin-off of the BlackBerry Messenger business has also been mooted.
The firm is said to have set itself a deadline of November to complete a sale, but that may prove impractical, especially if possible buyers are waiting for the price to drop further. And Canadian takeover rules do not help either. BlackBerry is preparing to lobby the government to relax laws which lead to automatic review of any deal over C$344m ($332m) in value, involving an overseas investor. The board will want BlackBerry’s options to be as open as possible, especially if any domestic bid, such as one put together by Fairfax, fails.