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A man is silhouetted against a video screen with the BlackBerry logo as he pose with a Blackberry Q10.

DADO RUVIC/Reuters

BlackBerry Ltd. desperately needs a takeover bid. On Monday, it got the illusion of one.

Fairfax Financial Holdings Ltd. and the cellphone maker do not have an agreement whereby the insurer, which is sitting on a big stake in BlackBerry, will buy the company. They have a letter of intent – something some securities lawyers say they try specifically to avoid announcing in other cases.

Yet reading headlines about lifelines for Blackberry and bids and sales, that may not be clear to many out there in the marketplace, which is exactly what both parties need.

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BlackBerry needs the dwindling number of customers it does have to have the confidence to keep buying handsets and server setups, or the company really is doomed. The announcement Friday that its new phones were not moving, and that staff levels would be slashed by 4,500 people, made all the wrong kinds of headlines. No chief information officer in his or her right mind would be really comfortable buying BlackBerry products after that. BlackBerry needs to convince that CIO it will be around in six months or a year, at the very least.

At some point, a company's failure becomes self-perpetuating. BlackBerry may well have hit that point on Friday.

Fairfax and its head Prem Watsa would have made that exact same calculation. The Wall Street Journal reports that they spent the weekend after Friday's announcement of BlackBerry' dismal performance scrambling to pull together some sort of transaction. If there is to be a business worth buying, as opposed to a pile of cash and patents, Mr. Watsa must have known he had to try to stop any further spiral of confidence. He needs time to convince pension funds and banks to partner with him, and time had become a great danger.

What the company and Mr. Watsa came up with on Monday does not advance the ball very far beyond what is already known and well reported. The Globe and Mail said in early August, when BlackBerry officially put itself up for sale (as opposed to the unofficial sales process that had been running for months.), that "Fairfax is holding talks with a number of private equity and industry players who might be interested in participating in a buyout, according to people familiar with the situation."

A month later, things had not gotten much further.

On Sept. 9, the Globe reported that Fairfax was "courting some of Canada's largest pension plans to join it in a buyout consortium" but "sources say none of the big funds have jumped on board with the idea, amid growing skepticism about the company's ability to turn around falling sales."

It's hard to see quite how Friday's announcement that sales had plunged and the company was facing a huge loss would have changed that equation for any pension fund.

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So what has really changed? The only thing really new in the announcement is there is a potential price of $9 a share (or less) and a break fee for Fairfax if this all falls apart.

There is a long due diligence period. For Fairfax, that shouldn't be all that necessary. Until recently, Mr. Watsa was on BlackBerry's board. It will, however, let consortium partners have a look at the books and perhaps find something that makes them more comfortable.

What has not changed?

There is not very much more certainty of a Blackberry "rescue" than there was a few days ago, despite what the headlines say. Mr. Watsa's "consortium" appears frail at best, with no others willing to give their names, and there is no committed financing. Talk of the consortium is in the future tense. For example, it is "to be led" by Fairfax. The letter "contemplates" a transaction. The fact that the break fee is payable only to Fairfax is telling about how committed Fairfax's partners are at this point. Break fees recognize work done and risk taken – so this signals only Fairfax really qualifies.

This isn't a takeover, it's a public relations move.

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