Indian Billionaire Prem Watsa acquiring Blackberry for $4.7 Billion

Fairfax Financial Holdings, a company owned by Canada based Indian Billionaire Prem Watsa is going to acquire the Mobile Handset maker Blackberry for $4.7 Billion.

BlackBerry said in a news release that it has signed a “letter of intent agreement” under which the company’s shareholders would receive $9 US cash for each BlackBerry share they hold and the Fairfax led consortium would acquire, for cash, all of the outstanding shares of BlackBerry not already held by Fairfax. However, BlackBerry would remain open to other offers until November 4, 2013. The Deal is subject to the approval of Regulators.

The Highlights of the Deal are:

  • BlackBerry shareholders would receive U.S. $9 per share in cash
  • Transaction valued at approximately U.S. $4.7 billion
  • Consortium permitted 6 weeks to conduct due diligence
  • BlackBerry entitled to go-shop during due diligence period, subject to payment of a termination fee in the event alternative offer accepted

Fairfax Financial Holdings is the largest institutional shareholder of Blackberry with 10% Stake and it would buy back the shares from Stock market in a $4.7 Billion or a $9 per share deal, making Blackberry a Private Company again. It is seeking financing from  Bank of America  Merrill Lynch and BMO Capital Markets for the deal.

Prem Watsa was on the Board of Blackberry until he resigned in August 2013 over conflict of Interest. His resignation had speculated the rumours that he would come back to the rescue of blackberry.

Within 6 weeks of his resignation, Blackberry announced that it would be acquired by Watsa led Fairfax Financial Holdings Ltd. Both Blackberry and Fairfax Financial Holdings are based in Canada.

Prem also said in a statement that the sale “will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.”

“We can deliver immediate value to shareholders while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world,” he said.

Watsa was born in 1950 in Hyderabad (Andhra Pradesh) and is a former IITian. He is the Founder and CEO of Fairfax Financial Holdings since 1985. He is often called as the Warren Buffett of Canada.

He founded Fairfax in 1985 and currently holds more the 50% stake in the company. Earlier Fairfax was known as Markel Financial, which went almost bankrupt. In 1985 Watsa acquired it and infused fresh round of capital which proved to be the rebirth of the company. It was rebranded as Fairfax in 1987 which is an acronym of Fair and Friendly Acquisitions. Today the Stock price of Fairfax is about $420 making it comparable to companies like Apple and Google.

Fairfax Financial has over 8,200 employees worldwide (5,000 of them in the United States). Ironically, there are just 30 employees at head office in Toronto.

Prem Watsa was also the Director and member of Risk Committee of India-based ICICI Bank Ltd.until he retired from board on June 27, 2011.