Troubled smartphone maker BlackBerry has agreed a deal that will see it sold to a consortium led by its largest shareholder for $4.7 billion.
The Canadian firm, which has its European headquarters in the UK, said it had signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings Limited would acquire the company subject to due diligence
This comes a week after BlackBerry announced plans to cut 40% of its global workforce as it said it expected to report massive losses of almost $1bn in its second quarter.
The smartphone company said it would lay off 4,500 employees in an attempt to slash costs by 50% and shift its focus back to competing mainly for the business customers who are most loyal to the brand.
Canadian billionaire investor Prem Watsa, a former BlackBerry board member and Fairfax’s chairman and chief executive, said: “We believe this transaction 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.”
Sales of shares in the Nasdaq-listed company, which plunged after Friday’s announcement, were halted after the news of the deal which would take it private.
BlackBerry, which started in 1999, is known for the loyalty of its users.
BlackBerry’s market share has dwindled in recent years, with Android devices from the likes of Samsung, and Apple’s iPhone gobbling up increasing numbers of customers.
It now holds just 2.9% of the market, according to research firm IDC, compared with 20% in Autumn 2009 when it was the dominant smartphone for business people.
The firm was hoping to turn things around with a fresh operating system and new.
It carried out a high profile launch of two new handsets at the start of the year, the much delayed Z10 touchscreen and Q10 with a qwerty keyboard, which went on sale later in the year.
A new phone, the touchscreen Z30, was unveiled last week.
However, the phones have failed to capture the public’s imagination in the same way as rival handsets.
The agreement with Fairfax allows it to “go shop” for alternative offers for the firm should they become available during the due diligence process, which is expected to take until November 4th.
Chairwoman Barbara Stymiest said: “The special committee is seeking the best available outcome for the Company’s constituents, including for shareholders. Importantly, the go-shop process provides an opportunity to determine if there are alternatives superior to the present proposal from the Fairfax consortium.”