Fairfax In The Home Stretch On BlackBerry Acquisition, Right?

| About: BlackBerry Ltd. (BBRY)

There are just eleven days to go before the expiry of Fairfax Financial’s (OTCPK:FRFHF) due diligence window on their previously-announced all cash $9/share acquisition of BlackBerry (NASDAQ:BBRY). Mr. Market would normally expect the formal takeover bid to be tabled by the end of that period, although BlackBerry’s current share price is about 6% below the Fairfax “bid” price; weaker than you might expect at this late stage.

Under the terms of Fairfax’s letter of intent, there’s nothing preventing the Blackberry Board from extending the due dili window, but one assumes that’s something they’d hate to do. Surely, the BlackBerry board is primarily focussed on executing a Definitive Agreement with Fairfax at $9.00 as proposed — and the sooner they get that deal consummated, the sooner the company’s enterprise customer base will breathe a sigh of relief and restart the process of upgrading to the Q10.

I don’t want to fuss too much, but despite a variety of BlackBerry “deal leaks” over the past two weeks, none of them have been about Fairfax making progress on securing the $4.3 billion in debt and equity financing it needs to close its $4.7 billion acquisition. Not since Bloomberg found a talkative Leo de Bever, CEO of Alberta Investment Management Corp., anyway (see prior post “Confusion reigns over BlackBerry M&A process” Oct. 10-13). As I said to BNN’s Catherine Murray that day, this wasn’t a good sign.

Since then we’ve read pretty detailed stories about Cerberus (see prior post “As BlackBerry shares swoon, a different kind of buyer emerges“), Cisco (NASDAQ:CSCO) (later dismissed by Fortune’s Dan Primack), Mike Lazaridis and Doug Fregin (see BNN interview on the topic), Lenovo (OTCPK:LNVGF) (see BNN interview on the topic), and now even former Apple (NASDAQ:AAPL) CEO John Scully. On the Scully item, this from today’s Globe and Mail:

John Sculley, the former Apple Inc. CEO who famously clashed with Steve Jobs, is exploring a bid for beleaguered BlackBerry Ltd. with Canadian partners, sources have told The Globe and Mail.

Although he said he couldn’t comment to the Globe regarding the leak about his interest, he provided some grist for the mill just the same:

“The only thing I would say is, I think there’s a lot of future value in Blackberry,” Mr. Sculley said, “but without experienced people who have run this type of business, and without a strategic plan, it would be really challenging … Whoever buys it would have to have a strategic plan that was credible and could succeed, and they would want to have an experienced team that would be able to implement that plan.”

Although the coverage to date has not made any linkage, it may well be that Mr. Sculley is actually part of the Fairfax bidding group. I’m not sure why that wouldn’t be part of the leak that was provided to the Globe yesterday, but it isn’t inconceivable. Well known to be a BlackBerry user, Mr. Sculley has previously stated that BlackBerry should get out of the handset business (H/T TweakTown):

In an interview with Bloomberg, the former CEO said that BlackBerry is at the point where it can still turn around, but it must stop building hardware. Sculley said that BlackBerry can “come back if they drop hardware and focus on secure messaging,” although he also cautioned that “the clock is running out” on the company.

We are clear that André Bourbonnais, SVP of Private Investments at CPP Investment Board, has stated that a “strategic” player would have to be part of any go-forward BlackBerry plan for his team to be involved, and perhaps Mr. Sculley fits that bill. However, if Mr. Sculley is truly leading his own bidding group, by my count, he would represent the third different group currently in the debt and private equity market in the hopes of securing more than $4 billion of financing, along with Team Mike and Team Fairfax.

That Mr. Sculley’s name is coming out only now, when JPMorgan and RBC Capital Markets were engaged back in May 2012 to review BlackBerry’s strategic alternatives, doesn’t necessarily undermine the prospect that he may actually pull together a firm bid before Christmas. But, since Fairfax has to firm up by November 4th, Sculley et al don’t have time to accomplish much.

Fairfax CEO Prem Watsa told the Globe and Mail last month that he had no doubt that the financing will be secured. With just eleven days to go before their due dili window expires, Fairfax must be in the home stretch. Right?