The Successful Investor Hotline – Friday, September 27, 2013

Article Excerpt

BLACKBERRY LTD., $8.28, Toronto symbol BB, has accepted a $9.00 U.S.-a-share takeover offer from a consortium led by Fairfax Financial Holdings (Toronto symbol FFH). Fairfax is the smartphone maker’s largest investor, with roughly 10% of its outstanding shares. This tentative agreement gives BlackBerry until November 4, 2013, to secure a better deal. It will also give Fairfax and its potential partners time to examine BlackBerry’s financial condition. If BlackBerry accepts a rival offer, it will have to pay a $157.2-million U.S. break fee to Fairfax. That fee would rise to around $262 million U.S. if the company signs a binding deal with Fairfax and does not go through with it. However, Fairfax would not have to pay a fee if it cancels the deal. To put these figures in perspective, BlackBerry held cash and investments of $2.6 billion U.S., or $4.90 U.S. a share, on August 31, 2013. Uncertainty over Fairfax’s offer and the low chance of a higher bid are why BlackBerry shares…