BlackBerry is giving up its effort to sell itself to a large investor, and will replace CEO Thorsten Heins, the company said on Monday.
The company said that, rather than bid for it, Fairfax Financial will lead a group of investors pouring $1 billion into the troubled handset maker, with Fairfax CEO Prem Watsa becoming lead director. Former Sybase CEO John Chen will serve as interim CEO and executive chairman once the investment is completed, which BlackBerry said should be within the next two weeks.
The investment will come in the form of a debt sale, BlackBerry said, with Fairfax itself putting $250 million into the company.
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” current BlackBerry chair Barbara Stymiest said in a statement. “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”
Monday was the deadline that the company had set for investor Fairfax Financial to put in a formal bid for the company. In September, BlackBerry had announced a deal to sell itself to Fairfax for $4.7 billion, however the deal was nonbinding and contingent on the investment company lining up capital to finance the bid. BlackBerry had also been seeking other buyers.
The announcement marks the end of the company’s strategic review, BlackBerry said. However, it leaves the company’s future as uncertain as ever; confidence in BlackBerry from investors and customers has been waning, despite reassurances from the company that it and its products are here to stay.
In addition to ceding the CEO post, Heins will step down from the board of directors, as will director David Kerr.
The move was reported earlier Monday by Canada’s Globe and Mail, citing sources.