The attempted sale of BlackBerry Ltd. proves one thing about takeovers: the messiest auctions are usually the loudest.
The corollary in such cases is that noise does not necessarily equal action. There is a reason so much information leaks, and it is often to make what is a struggling transaction look busy.
Combine that with a rabid group of reporters under pressure to produce stories on a file that readers are following closely, and the revelations come steadily. Some, of course, strain credulity.
With only a week left until Fairfax Financial Holdings Ltd. has pledged to make a firm bid to buy the company for $9-a share, a survey of media reports on the subject would suggest that most of the tech world – as well as parties outside of the industry – have had a look at BlackBerry.
But that's a long way from wanting to buy the company, even when the reports are accurate. In many cases, shortly after come the disavowals.
First there was a report from Britain that the big Canadian pension funds were supposedly lining up. Then came reports casting doubt on that. There may be a couple involved, but there's not exactly a rush to the front of the queue.
There was a short-lived story suggesting interest from a private equity fund called Coller Capital, which specializes in buying unwanted stakes in private equity funds, not investing directly in companies. That was corrected by the publisher the next day.
SAP AG was supposedly interested. The company's chief financial officer issued a denial, saying that BlackBerry was not a strategic fit – something that seemed pretty clear from the outside looking in.
There is still a laundry list of companies said to be interested and have yet to make a denial. This group includes Cisco Systems Inc. and Google Inc. Private equity firm Cerberus Capital Management has not yet bowed out publicly. There is Lenovo Group Ltd., though the Chinese computer maker would seem to have a formidable obstacle in the form of Canada's national security rules. And there is Fairfax, which says it has the partners, money and plan, but has not said who, how or what.
With the exception of Coller, which seems to have been a clear case of mistaken identity, there is probably truth to many of these reports. People are looking, but it's dangerous to mistake that for more.
Are they taking a look with a real view to buying the company? Not necessarily, aside from Fairfax, and perhaps Cerberus.
As one person with a seat looking into the process points out, there is little downside to signing a non-disclosure agreement (NDA) with BlackBerry.
The chief executives of competitors or companies with any passing interest in BlackBerry will be grilling their corporate development teams to ensure there is nothing of value at BlackBerry that they are missing.
Others may think BlackBerry is still overpriced even at this market valuation (the Fairfax bid, if it comes, will be for $4.7-billion), but there is no reason not to get a look at the books to see if there is something to bid for later, should the assets come on the market once again.
One big disincentive to signing an NDA with a company that is for sale – and that you really want – is that it usually bars the signer from using the information gained to make a hostile bid later. The clause is known as a standstill agreement, and it is designed to ensure that if you are going to bid you do so as part of the controlled auction. Acquirors would rather not sign a standstill, but they are given little choice.
However, signing a standstill is unlikely to be an issue in this case as it appears that one way or another BlackBerry is likely to be sold via this process, at some price. If not, there is a strong chance that the company will be broken up soon after. In either case, a standstill would be moot.
In a worst-case scenario, if BlackBerry ends up sold off in parts in a distressed fashion, due diligence underway now would put the examiners in a position to move fast.
With shares of BlackBerry still trading well below $9, the market has cast its verdict – what we are seeing here is a lot of window-shopping.