Lawyers on Major Transactions
Four Firms Dialed in for Deal to Take BlackBerry Private
Roughly a month after saying it would explore its strategic options, BlackBerry Ltd. announced Monday it has agreed to sell itself to a consortium led by its largest investor, Canadian insurance company Fairfax Financial Holdings, in a deal worth $4.7 billion.
The proposed deal is for the 90 percent of the company that Fairfax Financial—which is being represented by Shearman & Sterling and Canadian firm McCarthy Tétrault—does not already own.
Waterloo, Ontario-based BlackBerry said last month it was bringing in legal advisers from Skadden, Arps, Slate, Meagher & Flom and Canadian firm Torys to advise a special committee of the company's board tasked with considering everything from possible strategic alliances to a sale. The move came as BlackBerry—which dropped the Research in Motion name in July in favor of its primary product's moniker—grappled with sharp declines in profits and subscribers and fell further behind smartphone-sector rivals like Apple and makers of devices based on Google's Android operating system.
BlackBerry's outlook has continued to sour since the special committee's formation. The company said last week that it will lay off 4,500 employees—roughly 40 percent of its workforce—by the end of this year—an announcement that coincided with a dismal quarterly earnings report that sent BlackBerry's stock plummeting.
Under the deal announced Monday, Toronto-based Fairfax Financial is leading an investor group that has signed a letter of intent agreement to pay $9 in cash for each BlackBerry share, a price that represents only a 3.2 percent premium over the target's Friday closing price. The transaction would make BlackBerry a private company for the first time since predecessor company RIM launched its initial public offering in Toronto in 1997.
Though the sale is subject to due diligence, and the two sides must still negotiate a definitive agreement and obtain regulatory approval, it is expected to be completed by Nov. 4. Between now and then, BlackBerry will actively solicit alternative proposals while the investor group works with Bank of America Merrill Lynch and BMO Capital Markets to arrange financing. Should BlackBerry agree to an alternative deal before Nov. 4, it will pay the Fairfax Financial-led group a break-up fee of 30 cents per BlackBerry share. The break-up fee would rise to 50 cents per share if an alternative deal is made after a definitive agreement is signed with the Fairfax consortium.
The Shearman team advising Fairfax Financial includes New York-based M&A partner Scott Petepiece as well as capital markets partner Jason Lehner, who splits his time between the firm's New York and Toronto offices. Toronto-based M&A counsel Sean Skiffington is also working on the matter.
McCarthy Tétrault, meanwhile, is advising Fairfax Financial with a team of attorneys led by Toronto-based M&A partner Garth Girvan and capital markets partner David Tennant.
Skadden and Torys continue to advise BlackBerry's special committee with respect to the prospective takeover, according to the company's deal announcement. Both firms have a history of advising the smartphone maker.
BlackBerry's in-house legal chief is Steven Zipperstein.
Davis Polk & Wardwell corporate partner Phillip Mills, who is based in New York, is representing J.P. Morgan in its role as one of BlackBerry's financial advisers on the deal.