BlackBerry shares fell as much as 18 percent after Fairfax abandoned the takeover plan, opting instead for a bond deal and management shakeup. Fairfax, BlackBerry’s largest investor, will invest $250 million in the convertible debentures, according to a statement today. CEO Thorsten Heins will step down, while former Sybase Inc. chief John Chen becomes executive chairman, putting him in charge of the company’s strategy.
The transaction, slated to be completed later this month, follows a six-week attempt by Fairfax to attract financing for its buyout bid, which would have taken the smartphone maker private. The $1 billion infusion will help stabilize the unprofitable company as it burns cash, though BlackBerry will still pursue other deals and is now more open to the idea of a breakup, people familiar with the matter said.
“The important thing is, what is the strategy?” said James Moorman, an analyst with S&P Capital IQ in New York. “They have a chance, and they have a little more runway with the additional cash, but they need to start making some smart decisions.”