In September the company had agreed in principal be be bought by a consortium led by its largest shareholder Fairfax Financial for $4.7bn (£3bn), although reports suggested the consortium had struggled to finance the bid. BlackBerry has now confirmed it will look to raise around $1bn from institutional investors, including about $250m from Fairfax.
On the close of the transaction, John Chen, the chairman and CEO of enterprise software company Sybase will become executive chair of BlackBerry’s board of directions and interim chief executive officer – an appointment that emphasises BlackBerry’s strategy to focus on the b2b side of its services and operations.
Analysts have previously said the “most attractive option” for BlackBerry’s future is to focus on business users.
Chen replaces Thorsten Heins, who became CEO in 2012 and has overseen the launch of BlackBerry’s make or break operating system BB10 and the rebrand of its corporate entity from Research in Motion to BlackBerry.
Chen says: “BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success. I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.”
Barbara Stymiest, chair of BlackBerry’s board, says the financing provides an “immediate cash injection” which will help implement the changes necessary to strengthen the company and to remain a “strong and innovative partner” to its customers.
Last month BlackBerry reported a loss of $965m in its second quarter, which it blamed on the “increasingly competitive business environment” that his seen it to lose ground to Samsung and Apple.
Once the transaction closes, Prem Watsa, chairman and CEO of Fairfax – who in August resigned from his position on the BlackBerry board due to potential conflicts of interest that could have arisen as the smartphone maker explored its strategic options – will be appointed lead director and chair of Blackberry’s compensation, nomination and government committee.
Ovum’s chief telecoms analyst, Jan Dawson, says: “Fairfax’s investment will buy the company some time, which it badly needs, but the company needs a new strategy more than ever. If Fairfax had taken the company private, it could have kept that strategy to itself. But with BlackBerry remaining a public company, Chen and Fairfax Chairman and CEO Prem Watsa need to start communicating that new strategy very soon to inspire confidence in a turnaround.”
BlackBerry’s share price was down 17.25 per cent to $6.43 at the time of writing.