Blackberry Plummets on Fairfax Deal
The drama surrounding Blackberry (NASDAQ:BBRY) doesn’t appear to be letting up on this Monday morning. Shares of the company were sent racing to the downside following a couple startling announcements from management before the market open. Unfortunately for shareholders the company announced it will abandon plans for a sale as it struggles to gain momentum in the smartphone market. In September, BlackBerry welcomed the market to some good news stating it had reached a tentative deal with Fairfax Financial on a buyout valuing the company at $4.7 billion. Even in the ticks following this announcement just a month ago, the street was skeptical on the prospects of a deal going through.
Instead, Blackberry has announced it will be receiving only a $1 billion investment from Fairfax, $3.7 billion lower than initially planned. Fairfax will acquire $250 million of the “convertible debentures.” The remaining $750 million will come from institutional investors. To make things even worse, the company’s Chief Executive Officer, Thorsten Heins who took control of the ailing company just a few years ago will be stepping down from his role within the company. Since he took the reigns the company has continued to struggle. Declining sales and relevance have continued to plague the company amid high competition from Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) .
While the company looks for a new, and hopefully life saving CEO, John S. Chen will be appointed interim CEO. Moreover, Chen will be appointed executive chair of BlackBerry’s board. Chen is a well known figure in the enterprise-computing spectrum. Prior to his involvement with BlackBerry, Chen served as Sybase CEO and chairman. Shares of the company are down by more than 10 percent in early session trading to $6.93 at the time of this writing. In the coming days it seems likely volatility within the name will remain high as the company’s weak handed investor base digests the new deal.
Sorry. No data so far.