I’m not surprised to see that Prem Watsa’s Fairfax Financial (FRFHF) has made a bid for Blackberry (BBRY) at $9.00 per share in cash. Fairfax owns roughly 10% of the company and by taking the company private, I’d expect to see Fairfax monetize the patent portfolio and focus on the Enterprise and Government businesses, while pretty much avoiding the consumer market. Avoiding quarterly earnings reports and Wall Street will be a huge benefit for Blackberry, as the company faces a tough road ahead. I believe Watsa sees the significant net cash position and the value of the patent portfolio and sees very little downside, while the ability to turnaround the Enterprise and Government businesses could create a multi-bagger investment of significant size. This is the type of contrarian investment, which has made him fabulously wealthy and I believe the deal makes a lot of sense from a risk-adjusted returns perspective. I wouldn’t be shocked if another buyer stepped in, although I believe the price isn’t likely to be much higher than $9 per share.
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