Termination fee of BlackBerry is seen as intimidating - EXAME.com

Buyers | 01/10/2013 07:00

The BlackBerry Fairfax agreed to pay a fee of U.S. $ 157 million if the group come up with a better proposal than the U.S. $ 2.4 billion with another buyer

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REUTERS / Given Ruvic

BlackBerry logo is seen through broken glass: the termination fee will increase to $ 262 million if the smartphone maker and Fairfax enter into a transaction permanent

New York and Toronto – The BlackBerry Ltd. was so desperate to find a buyer who agreed to pay its biggest shareholder a rare termination fee for a provisional offer of acquisition – a move that could deter rival bidders.

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difficulties, the smartphone maker said last week that a group led by Fairfax Financial Holdings Ltd., an insurance company based in Toronto, has signed a letter of intent for the acquisition U.S. $ 4.7 billion.

Although Fairfax CEO Prem Watsa, has not yet identified the rest of the group purchase, or obtained funding committed to the business, BlackBerry to the group agreed to pay a fee of $ 157 million if he gets a better deal with another buyer.

provision of BlackBerry in agreeing a fee without the signing of a definitive agreement is “unprecedented” and could have a chilling effect on your auction, according to Tor Braham, former director of investment banking at Deutsche technology Bank AG.

If a higher bid comes, Watsa – board member of the BlackBerry until last month – receives the additional termination fee he can get on a stake of nearly 10 percent.

“It’s a desperate situation,” said Willy Shih, professor of management practice at Harvard Business School and former executive of Eastman Kodak Co., in a telephone interview. “The terms of the agreement recognize their plight. The Fairfax is very astute. “

This is a “beautiful” deal for Watsa, Shih said.

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