Fairfax Financial Holdings was initially due to take over BlackBerry later today with a US$4.7 billion bid, but the plan was shelved.
BlackBerry will instead receive an investment of US$1 billion from Fairfax and other institutional investors. The transaction is expected to be completed within the next two weeks. Once the transaction is closed, current CEO Thorsten Heins will step down from his position and be replaced by John S. Chen, who is also appointed as Executive Chair of BlackBerry's Board of Directors.
Mr. Chen, who acts as the Interim CEO pending completion of a search for a new candidate, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry. The announcement today marks the conclusion of the review of strategic alternatives previously announced by the company's Board of Directors on 12 August.
MarketWired - "Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," said Barbara Stymiest, Chair of BlackBerry's Board. "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."
Mr. Chen previously served as the chairman and CEO of Sybase Inc., beginning in 1998. Under his leadership, Sybase was transformed from a mature technology company into a high-growth enterprise data management, data warehousing, mobility management and analytics innovator that was acquired by SAP AG in 2010.
How BlackBerry will progress from here is anyone's guess, but the stock market is not responding very well to the news as BlackBerry's stock price fell more than 18.5% in pre-market trading.