Even in the private equity world, where public disclosure is much less onerous, it's rare to see a deal where only the lead bidder is named. Maybe the partners hide in the weeds until the formal announcement, but the partners usually fess up to their commitment.
Yet in Fairfax Financial Holdings Ltd.'s $4.7-billion (U.S.) bid for BlackBerry Ltd., the equity partners "want to remain anonymous until the due diligence is completed," reports the Globe's Tara Perkins.
So there's a deal, but we don't know with whom. Why would BlackBerry and FairFax go out on a limb to announce such a formal offer without the other partners? Just look at the timing for the answer.
After BlackBerry's disastrous announcement on Friday, in which the company said it would lay off 4,500 workers and take a loss of nearly $1-billion (Canadian) in the second quarter, the narrative quickly needs to change. The weaker a company looks, the more it gets hammered in public markets. And the less incentive customers have to buy its phones.
By going private, BlackBerry can get out of the public spotlight and operate with less scrutiny – or so it hopes.
And then there's the stock price. Early Monday morning, the shares fell to $8.20 (U.S.) Monday morning, allowing Fairfax to bid just $9 per share and actually offer a premium.
We can't know for sure, but those two factors must have weighed on BlackBerry and Fairfax, and that's why the buyer is happy to announce a deal without even naming its partners. They just need some news – any news – to change the story. Now they have to hope that any potential partners aren't spooked when they see BlackBerry's books.
The due diligence period is expected to end Nov. 4.
(Tim Kiladze is a Globe and Mail Capital Markets Reporter.)
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