TORONTO — BlackBerry, the struggling smartphone maker looking to sell itself, has drawn interest from private-equity firm Cerberus Capital Management, says a person with knowledge of the matter.
Cerberus is looking to sign a confidentiality agreement with BlackBerry that would give it access to additional financial data, said the person, who asked not to be identified because the negotiations are private.
Cerberus’s interest in BlackBerry, which may not lead to a bid, was reported earlier by the Wall Street Journal.
BlackBerry’s largest shareholder, Fairfax Financial Holdings, made a tentative offer on September 23 to buy the company for $4.7bn, saying it was leading a group of investors.
Fairfax did not disclose the name of its partners and the company had not yet lined up financing, raising concern that the deal would fall through.
Cerberus would bring expertise in dealing with troubled companies. The New York-based firm — which manages more than $20bn in assets — invested in car maker Chrysler in 2007 and led a group that acquired grocery-store chains from Supervalu earlier this year.
BlackBerry spokesman Adam Emery declined to discuss any talks that may be under way.
"We do not intend to disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives," he said.
BlackBerry will record costs of about $400m, four times the amount it originally projected, as the company cuts staff by 40% and sells equipment and real estate. The expenses cover the cost of firing 4,500 workers, a move that will reduce BlackBerry’s staff to about 7,000 people, the company said in a regulatory filing late on Wednesday.
As part of its cost-cutting plan, BlackBerry plans to unload factories, manufacturing gear and property. Those assets will be listed separately on its balance sheet until they are sold.
BlackBerry, coping with plunging sales and mounting red ink, is streamlining the business as it looks to seal a $4.7bn buyout deal with its largest shareholder, Fairfax Financial Holdings.
The company agreed to the tentative offer last month after years of losing ground to Apple and Samsung Electronics. In addition to the job cuts, BlackBerry is writing down unsold phone inventory by almost $1bn.
Even with the cuts, reaching the break-even point again will be a challenge, said Steven Li, an analyst at Raymond James in Toronto.
The firm’s lucrative services business, which supports corporate customers’ wireless devices, continues to fall, muddying the picture.
"We think profitability could remain elusive," Mr Li, who has the equivalent of a hold rating on BlackBerry shares, said.
Shares of Waterloo, Ontario-based BlackBerry were little changed on Thursday, closing at $7.96 in New York.
The stock price is trading at more than a dollar below the $9-a-share offer price, an indication that investors have doubts about the deal.
Fairfax, a Toronto investment company, has not revealed the names of other buyers in its takeover consortium, raising concern that broader support for the deal will not materialise.
Reuters
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