BlackBerry co-founders considering bid for company

Reuters

By Alastair Sharp

TORONTO, Oct 10 (Reuters) - BlackBerry Ltd co-founders Mike Lazaridis and Douglas Fregin are considering abid to buy the struggling smartphone maker, according to asecurities filing on Thursday, raising the prospect of analternative to a $4.7 billion offer led by its top shareholder.

The filing did not indicate whether the pair was planning tojoin or to present an alternative to a tentative $9-a-share bidby a group led by Fairfax Financial Holdings Ltd.Fairfax, which is headed by financier Prem Watsa, has not yetidentified other members of the group.

Lazaridis and Fregin together control some 8 percent ofBlackBerry, the filing said. That compares with roughly 10percent controlled by Fairfax.

Excluding Fregin's shares, Lazaridis controls 5.7 percent ofBlackBerry, or about 60,000 shares more than he did at the endof 2012, according to Thomson Reuters data.

Lazaridis, who until early last year was one of BlackBerry'sco-chief executives and co-chairmen, appears to be considering"the widest range of options possible," BGC Partners technologyanalyst Colin Gillis said.

"He's going to talk to people by himself; he's going to talkto Prem; he's going to talk to everybody," said Gillis.

Fairfax declined to comment on the Lazaridis filing, whichnoted that while Lazaridis and Fregin could make an offer, theycould opt to take other steps, including selling their shares.

BlackBerry declined to comment specifically on the news,repeating an earlier statement that it is conducting a robustreview of alternatives and would only say more if a deal is doneor the strategic review is otherwise ended.

Investors have been skeptical the Fairfax offer will garnerthe financing needed, and Gillis noted that Lazaridis' interestfaces the same challenge because the founders, for now, do nothave any funding lined up.

Analysts believe both parties could look to secure financialbacking from one or more of Canada's deep-pocketed pensionfunds. A foreign buyer for Blackberry faces a stringent reviewunder the national security clause of the Investment Canada Act,as BlackBerry's secure servers handle millions of confidentialcorporate and government emails every day.

Industry executives, lawyers and analysts say that could limit the pool of foreign entities that may be allowed toacquire all, or at least certain parts of the company.

In sign of investor skepticism, BlackBerry's stock hastraded well below Fairfax's $9 offer price since the bid wasannounced it last month, days after BlackBerry warned it wouldreport slumping sales, a big loss and job cuts.

News of the Lazaridis' interest pushed shares in the companya bit higher. The stock turned positive after the news andclosed on Thursday up 1.1 percent at $8.20 on the Nasdaq. But ithas fallen more than 20 percent since the company warned on itsearnings.

Lazaridis signed a confidentiality agreement with BlackBerryon Monday, according to the filing. If a takeover is successful,Lazaridis would become chairman, and Fregin would appoint adirector, it says.

Lazaridis and Fregin, who together founded the company thenknown as Research In Motion Ltd in 1985, have hired GoldmanSachs and Centerview Partners LLC to assist with a strategicreview of the stake.

While Lazaridis was a driving force behind the technologybehind the BlackBerry, Fregin played a more minor role. He leftthe company as it grew into a powerhouse that produced what wasthen the must-have smartphone for professionals and politicians.

Fregin recently teamed up with Lazaridis again to startQuantum Valley Investments to fund quantum physics and quantumcomputing initiatives.

Lazaridis served as co-CEO and co-chairman with JimBalsillie, a marketing specialist who also stepped down fromthose roles last year as the company's outlook turned dire.

Its travails came to a head in August when BlackBerry putitself on the block after lackluster sales for its new devices. It has struggled for years to compete with AppleInc's wildly popular iPhone and a range of devicesusing Google Inc's Android operating system.

Sources close to the matter have told Reuters thatBlackBerry is in talks with Cisco Systems Inc, Googleand Germany's SAP AG among others, about selling themall, or parts of itself. The potential buyers have declined tocomment.

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