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BlackBerry To Go Private In $4.7B Deal As Fairfax Bets On Enterprise Business

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After pre-reporting a massive loss late last week, BlackBerry went ahead with plans to find strategic alternatives and announced an initial agreement with Fairfax Financial to sell itself for $4.7 billion.  The two companies signed a letter of intent that is contingent on due diligence, during which the embattled cell phone maker can shop around for better offers.  AFter being initially halted, BlackBerry's stock soared on the news.

BlackBerry appears to have failed at its attempts to turn itself around, banking on their new BB10 operating system.  The company has now signed a letter of intent with Fairfax, which is looking to pay $9 per share in cash to take them private.

In a statement released Monday, the companies noted due diligence and negotiations are expected to be completed by November 4, during which BlackBerry can shop around for better offers.  Breaking up the current transaction would result in BlackBerry paying Fairfax $0.30 per share fee; Fairfax owns about 10% of the smartphone maker.  Financing for the proposed deal will be provided by Bank of America /Merrill Lynch and BMO Capital Markets.

BlackBerry has been in trouble for a long time now, feeling the pressure of increased competition from Apple , Samsung, and other cheap Android-powered smartphones.  While the company made some encouraging changes, and seemed to have had a good start with its new Q10 and Z10 models, they pre-announced a nearly $1 billion loss for the quarter ended June 30.  As my colleague Abram Brown reported, management took a massive write-down on inventory of their new phones, along with slashing 40% of its workforce, or 4,500 employees, and continued to burn through cash.

Shares in the embattled cell phone maker were halted around 1:22 PM in New York, and then took off around 2:00 PM as they began trading again.  By 2:15 PM, the stock was up 1.9% to $8.89.