Fairfax Financial Holdings Ltd is struggling to raise financing for its $4.7 billion bid for BlackBerry Ltd, with several large banks declining to participate on concerns that the smartphone maker will not be able to reverse its fortunes, according to people familiar with the matter.
Fairfax, which is run by Canadian financier Prem Watsa and BlackBerry's largest shareholder, is working with Bank of America Merrill Lynch and BMO Capital Markets to put together a lending syndicate for a deal, but they have been turned down by several large lenders, the sources said.
Watsa had said he has every intention of completing the acquisition of BlackBerry Ltd, despite doubts that the $4.7 billion deal for the troubled smartphone maker will go through.
In September, BlackBerry had announced that Fairfax signed a letter of intent that "contemplates'' buying BlackBerry for $9 a share.
Watsa had stepped down as a board member in August because of potential conflicts when BlackBerry announced it was considering a sale. If the proposed deal goes through, BlackBerry would go private and no longer be traded publicly.
Fairfax's average cost per share in acquiring BlackBerry shares is $17. The Canadian insurance and investment firm has lost hundreds of millions on BlackBerry.
Analysts say that although BlackBerry's hardware business is not worth anything, the company still owns valuable patents. BlackBerry is also strong in having total cash and investments of about $2.6 billion, with no debt, though it's burning through that stockpile. In just the past few months, it's spent about half a billion dollars.
Watsa had said Fairfax is not buying BlackBerry to break it apart.
"Rest assured when we do this it won't be done to split the company,'' Watsa had said. "I mean one of the reasons I went on the board, and I said it publicly, was to keep the company in Canada and to make sure it survives and exists in Canada. It is one of Canada's most successful companies. Companies do fall on hard times and they come back again and we expect this company to do the same.''
Watsa said BlackBerry needs to get out of the media glare that comes with being public and work on a long term turnaround in private.
The billionaire founder of Toronto-based Fairfax Financial Holdings Ltd is one of Canada's best-known value investors and has taken over troubled companies before. He compared his BlackBerry