Struggling smartphone maker BlackBerry has abandoned plans to sell its business and has instead opted to interchange its chief executive and lift a $1bn round of financing so as to secure its future.
In September the corporate had agreed in principal be be bought by a consortium led by its largest shareholder Fairfax Financial for $4.7bn (£3bn), although reports suggested the consortium had struggled to finance the bid. BlackBerry has now confirmed it’s going to look to lift around $1bn from institutional investors, including about $250m from Fairfax.
On the close of the transaction, John Chen, the chairman and CEO of enterprise software company Sybase becomes executive chair of BlackBerry’s board of directions and interim chief executive officer – an appointment that emphasises BlackBerry’s way to concentrate on the b2b side of its services and operations.
Analysts have previously said the “most attractive option” for BlackBerry’s future is to spotlight business users.
Chen replaces Thorsten Heins, who became CEO in 2012 and has overseen the launch of BlackBerry’s make or break operating system BB10 and the rebrand of its corporate entity from Research in Motion to BlackBerry.
Chen says: “BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and difficult decisions to reclaim our success. i glance forward to leading BlackBerry in its turnaround and business model transformation for the good thing about all of its constituencies, including its customers, shareholders and employees.”
Barbara Stymiest, chair of BlackBerry’s board, says the financing provides an “immediate cash injection” with a view to help implement the changes essential to strengthen the corporate and to stay a “strong and innovative partner” to its customers.
Last month BlackBerry reported a lack of $965m in its second quarter, which it blamed at the “increasingly competitive business environment” that his seen it to lose ground to Samsung and Apple.
Once the transaction closes, Prem Watsa, chairman and CEO of Fairfax – who in August resigned from his position at the BlackBerry board because of potential conflicts of interest that would have arisen because the smartphone maker explored its strategic options – would be appointed lead director and chair of Blackberry’s compensation, nomination and government committee.
Ovum’s chief telecoms analyst, Jan Dawson, says: “Fairfax’s investment will buy the corporate your time, which it badly needs, however the company needs a brand new strategy greater than ever. If Fairfax had taken the corporate private, it can have kept that method to itself. But with BlackBerry remaining a public company, Chen and Fairfax Chairman and CEO Prem Watsa ought to start communicating that new strategy very soon to inspire confidence in a turnaround.”
BlackBerry’s share price was down 17.25 per cent to $6.43 on the time of writing.