BlackBerry Ltd. became so desperate to find a potential buyer for the smartphone maker. This led to an agreement with its biggest shareholder to pay a rare breakup fee. The payment was for a tentative takeover offer. The move was seen to cause a possible deterrent for the rival bidders of the smartphone maker.
Last week, BlackBerry said that a group led by Fairfax Financial Holdings Ltd. had signed a letter of intent to acquire the struggling smartphone manufacturer. The supposed deal was priced USD4.7 billion.
Fairfax Chief Executive Officer Prem Watsa had not yet identified the other members of the buyout group or obtained a committed financing amount. BlackBerry agreed to pay the group a rare breakup fee amounting to USD157 million if the said group would offer a better deal.
According to the former head of technology and investment banking at Deutsche Bank AG Tor Braham, the willingness displayed by BlackBerry to pay without signing a definitive agreement was "unheard of". Braham also added that it could create a chilling effect on the smartphone maker's auction.
Supposing a higher bid would be offered, Watsa would get the termination fee of the tentative buyout. Another benefit is he could convert almost 10% of his holdings in BlackBerry into cash.
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