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BlackBerry Buyout: $4.7 Billion Offer Doesn't Guarantee a Future

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By William Peacock, Esq. on September 25, 2013 11:57 AM

We'd like to see a future where BlackBerry survives. Duopolies are undesirable, as they stifle innovation. (No, Windows Mobile 8's miniscule market share doesn't count.) Besides, BlackBerry was not a part of PRISM, even though it was hacked by the NSA.

Something resembling competition in the marketplace and approaching state-of-the-art security would be a desirable solution for most of us lawyers, and besides, who doesn't love a comeback story? That comeback, however, may never happen, despite the company receiving a $4.7 billion offer for a private buyout.

Offer Stalls Stock Freefall

A $1 billion loss. Forty-percent of the workforce slashed. Worst of all, the private jets are for sale! With the stock prices in freefall, The New York Times reports that BlackBerry seized upon the offer from a current minority shareholder, Fairfax Financial Holdings, to purchase the company at $9 per share. The company would go private, though it is uncertain what would happen after that.

The offer resulted in a letter of intent, but the bidding process is still open. Other companies could still swoop in and offer even more money, but if BlackBerry goes elsewhere, they'd owe either $157 or $262 million, depending on when the other offer is accepted. Meanwhile, Fairfax will be conducting due diligence and can lower its offer depending on what it finds.

The Future

The only thing this bid ensures is that BlackBerry shareholders will not completely lose their money. Recent announcements by the company indicate that they may be headed towards a non-phone future, as an apps-and-services company, an enterprise solutions company, or both. They did, after all, cannibalize their own phones' demand by releasing their popular messenger service for Android and iOS (which they also bumbled).

The reality is, the offer likely has more to do with patents than resurrecting the company's phone business. Though an expert cited by the Times only values the company's patents at about $2 billion, AllThingsD cites experts that value BlackBerry's 5,236 active patents and 3,730 applications at $4 to $5 billion in a bidding war.

If those estimates are to believed, this could simply be a patent grab. BlackBerry, as we knew it, could be lost forever.

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