BlackBerry has decided against selling to Fairfax Financial for an estimated $4.7 billion, and is instead raising $1 billion in private investments from Fairfax, as well as other investors, while CEO Thorsten Heins is stepping down from his post, the Canadian company announced on Monday.
Under the new deal, Fairfax has agreed to contribute $250 million privately. An undisclosed amount of institutional investors will collectively contribute the remaining $750 million.
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The transaction is expected to be completed within two weeks, after which John S. Chen will join the company as executive chair of BlackBerry’s Board of Directors, and act as interim CEO until Heins’ replacement is found.
Prem Watsa, chairman and CEO of Fairfax, will be appointed lead director and chair of the Compensation, Nomination and Governance Committee, while BlackBerry director David Kerr will also resign.
The announcement did not make it clear as to why Fairfax did not follow through with its intentions of acquiring BlackBerry, but did note “the conclusion of the review of strategic alternatives previously announced” in August.
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Although once a dominant force in the smartphone market, BlackBerry’s profits have steadily declined since Apple introduced its iPhone in 2007. The company reported an operating loss of almost $1 billion during second-quarter earnings for fiscal year 2014. In September, about 40 percent of the workforce was laid off.
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” said Barbara Stymiest, chair of BlackBerry’s Board. “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders.”