The fatal mistake that doomed BlackBerry

Beleaguered gadgetmaker BlackBerry said on Monday that it’s signed a tentative agreement to be purchased by a group led by Canadian holding company Fairfax Financial in a $4.7 billion deal. The transaction, in which BlackBerry would become a private company, represents a turning point for a once high-flying tech giant that played a key role in the mobile-device revolution only to be eclipsed by Apple and Google.

Fairfax, which already owns 10% of BlackBerry, will pay $9 per share for the company, about 3% more than its closing price on Friday. BlackBerry still has the flexibility to accept a better offer in a maneuver known as a “go-shop” process, but it’s hard to imagine that a sweeter overture will be forthcoming.

On Friday, BlackBerry announced that it would cut 4,500 jobs as it prepares to absorb nearly $1 billion in losses related to unsold-device inventory, sending its stock price plunging by 20%. Since last month, BlackBerry’s “special committee” has been evaluating strategic alternatives (like a sale) for the company. BlackBerry and Fairfax are expected to complete their due diligence by Nov. 4. By going private, BlackBerry (until recently known as Research in Motion) can continue to attempt a turnaround without the Wall Street pressure that accompanies public companies.

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