BlackBerry replaces CEO, abandons plan to go private

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BlackBerry (BBRY) has abandoned its plan to go private and is calling in a new leader in a last-ditch effort to turn around the troubled company. John Chen, formerly of Sybase, will be executive chairman of the board and interim CEO, and Thorstein Heins will step down.

Fairfax Financial, led by former BlackBerry board member Prem Watsa, had until this afternoon to submit a formal bid including financing details. Apparently the group could not obtain financing for its $4.7 billion bid, or changed its mind during the due diligence process. Fairfax has agreed to purchase $250 million worth of BlackBerry convertible debt, and BlackBerry says that it will sell another $750 million worth of convertible debt to other investors. Watsa will take on the role of lead director and chair of BlackBerry’s compensation, nomination and governance committee.

“Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment, reinforces its deep commitment to the future success of this company,” said Watsa. “I look forward to rejoining the BlackBerry Board and to working with the other directors and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy and growth.”

The financing and the leadership change are both expected to be complete within the next two weeks. BlackBerry said today that this marks the end of its “review of strategic alternatives,” but that does not mean another bidder will not emerge. Lenovo and Qualcomm are two potential strategic buyers who are reportedly interested, and BlackBerry is a lot less expensive today than it was last week. Its stock price fell more than 18% in pre-market trading, and when the market did open trading in BlackBerry shares was halted.

BlackBerry was once the leading manufacturer of smartphones, but the company was slow to transition to touchscreen phones after Apple redefined the market with the iPhone. BlackBerry now has less than 3% of the smartphone market, but it maintains some loyal enterprise customers, and holds patents for important encryption technologies.

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Martha DeGrasse

Editor, Wireless Infrastructure
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Martha DeGrasse is an editor at RCR Wireless News, and is the creator of the RCR Mobile Minute. Martha has been with RCR Wireless News since 2011. Her current focus areas are wireless infrastructure and heterogeneous networks. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York. Martha left Dow Jones to move to Austin, Texas, where she managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Follow her at Twitter @mdegrasseRCR