As Apple Inc shows interest in BlackBerry Ltd patents, board axes break-up

Nov 09 2013, 14:06 IST
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BlackBerry Ltd stunned investors on Monday by abandoning plans to sell itself, naming a new interim CEO. Where that leaves companies like Apple Inc is unclear. BlackBerry Ltd stunned investors on Monday by abandoning plans to sell itself, naming a new interim CEO. Where that leaves companies like Apple Inc is unclear.
SummaryBlackBerry Ltd drives frenzy with Apple Inc leading the pack to tear up maimed company.

BlackBerry Ltd's board does not believe a break-up of the Canadian smartphone maker is currently in its best interests, even though Microsoft Corp, Apple Inc and Lenovo Group Ltd, among others, have expressed interest in acquiring parts of the company, according to people familiar with the discussions.

The board rejected proposals from several technology companies for various BlackBerry Ltd assets on grounds that a break-up did not serve the interest of all stakeholders, which include employees, customers and suppliers in addition to shareholders, said the sources, who did not want to be identified as the discussions were confidential.

Microsoft and Apple had both expressed interest in BlackBerry Ltd's intellectual property and patents, a source briefed on the matter told Reuters. In 2011, the three companies had teamed up with others to buy patents from bankrupt Canadian telecoms company Nortel.

BlackBerry Ltd had also held discussions with Cisco Systems Inc , Google Inc and Chinese computer maker Lenovo, among others, about selling all, or parts of itself.

A BlackBerry Ltd spokeswoman declined to comment on the board's deliberations, and it is not known what specific proposals were rejected by directors during the company's three-month-long review of strategic options. Microsoft, Apple Inc and the other tech companies have all declined to comment on the matter.

BlackBerry Ltd stunned investors on Monday by abandoning plans to sell itself, naming a new interim chief executive, and announcing an $1 billion convertible notes issue to a group of investors including its largest shareholder the Prem Watsa-led Fairfax Financial Holdings, Canso Investment Counsel, Mackenzie Financial, Markel Corp, Qatar Holding and Brookfield Asset Management.

BlackBerry Ltd shares fell 16 percent on the news as investors fretted the company may have missed an opportunity to deliver shareholder value.

But the board felt the notes issue offered BlackBerry Ltd the most near-term certainty and the best chance for a turnaround, said the people familiar with the discussions. Most alternative proposals would have broken up the Waterloo, Ontario-based company, which was not in the best interests of all stakeholders, they added.

One of the sources said the board also took into consideration the current cost of the break-up. Winding down some of BlackBerry Ltd's businesses would have created liabilities, including in its commitments with suppliers, and would have weighed on the monetization of the company's intellectual property, the source said.

BlackBerry Ltd's assets range from devices and network assets to software and patents.

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