Shares of BlackBerry rose more than 6% Monday after it was reported that Fairfax Financial Holdings, run by investor Prem Watsa, had held talks with BlackBerry’s management about acquiring the company outright.
The unconfirmed report also stated that BlackBerry has created a committee and hired a team of investment bankers to advise on a potential acquisition. The unidentified source of the information noted that it was unclear if the talks are ongoing and how far along they may have advanced.
However, Fairfax has denied that it’s considering acquiring the remaining shares of BlackBerry , Bloomberg reported.
“Fairfax is not currently making a bid, or engaged in making a bid, for BlackBerry,” said Fairfax general counsel Derek Bulas in an email to BNN Bloomberg Tuesday.
Fairfax had earlier sought to acquire BlackBerry in September 2013 for $9.00 a share. The financial holding company already owned 10% in BlackBerry and intended to make it a private entity post the acquisition to stem the losses from disappointing device sales.
The transaction fell flat and the consortium led by Fairfax, which planned to acquire Blackberry, decided to have a cash infusion of $1 billion instead to resurrect the struggling firm with new management at helm.
However, at the end of March, Fairfax owned more than 46.7 million BlackBerry shares out of 554 million outstanding. Fairfax also owns $500 million of the $605 million in BlackBerry debt outstanding. That BlackBerry debt comes due this November.
If the bonds are paid back, Fairfax will lose almost $19 million in annual interest it is receiving. If someone else other than Fairfax acquires BlackBerry, then an offer has to be made to repurchase the bonds at 115% of par.
