Fairfax bid for BlackBerry reportedly coming up short

Fairfax is struggling to find banks willing to put up the $4.7 billion to buy the struggling company

In September, BlackBerry accepted a proposed $9 a share offer from a consortium led by Fairfax Financial Holdings last month, which would have amounted to $4.7 billion.

There have been rumblings that the deal might fall apart, and now that is starting to look more and more like it will ultimately be the case.

Fairfax has been struggling to raise the necessary $4.7 billion to bid on  BlackBerry, due to several large banks declining to participate, according to a report from Reuters on Friday. The banks are reportedly concerned that BlackBerry will not be able to reverse its downward trend.

This does not mean that the Fairfax deal is dead; other banks, notably Bank of America and Merrill Lynch could still come to the rescue. But the company has until Monday to get the deal in place.

BlackBerry could not be reached for comment.

So what happens if Fairfax falls through? Someone else could still step up and make a bid for the company. Numerous other have been reportedly interested in bidding.

They have included Canada Pension Plan Investment Board, Bain Capital, and Chinese smartphone and computer maker Lenovo Group. Earlier this month, reports surfaced that Google, SAP and Cisco were also interested.

An SEC document also showed that Mike Lazaridis and Doug Fregin were perhaps interested in buying back the company that they started.

And it was reported earlier this week that Facebook and BlackBerry had met to discuss a potential buyout, though there was no indication that Facebook was actually interested in bidding.

BlackBerry officially put itself up for sale in August, following dreary sales of its new BB 10 OS handsets in the second quarter.

And things have only gotten worse from there. 

In its second quarter earnings in September, BlackBerry revealed in September that it generated just $1.6 billion in revenue for the quarter. Analysts, meanwhile, were expecting about twice that—or $3.06 billion.

The company, which was recently dropped by T-Mobile's brick and mortar stores, is cutting 40% of its workforce.

As a result of all of this, the most likely outcome for BlackBerry is that, if someone else besides Fairfax buys it, it will be broken apart.

According to what analysts say, its messaging system could be worth between $3 billion and $4.5 billion, while its patents could be worth between $2 billion and $3 billion. Its  enterprise network could be worth $550 million to $1.1 billion. There is also another $2.6 billion in cash and investments.

The company itself is only valued as $5.4 billion.

Still, the company itself is putting on a brave face, writing a letter to employees last month telling them everything will be ok. 

(Image source: https://www.reuters.com)