BlackBerry sale could be made at lower price: analysts

TORONTO (CP) — Analysts predict that Fairfax Financial will follow through on plans to buy BlackBerry (TSX:BB), but could pay substantially less than originally announced as the smartphone maker’s market value erodes.

Fairfax announced Sept. 23 that it was leading a group that would offer US$9 per share, subject to a number of conditions. But a reduced, $7-per-share bid is likely to materialize once Fairfax and its partners complete due diligence over the next month, said CanaccordGenuity analyst Michael Walkley.

Based on CanaccordGenu- ity’s assessment, BlackBerry would be worth about $1 billion less than Fairfax’s initial proposal, which valued the company at US$4.7 billion.

Walkley said he has reassessed the company’s assets to take into account various changes in the BlackBerry’s business, including the flagging hardware operations that were the main reason for a US$965 million loss in the company’s second quarter.

“Given our belief BlackBerry’s hardware business will struggle to return to profitability despite significant cost cuts and a refocus on more high-tier enterprise segments, we struggle to assign any value to the hardware business,” Walkley wrote.

“Our sum of the parts analysis values BlackBerry at roughly $3.75 billion.”

BlackBerry shares have fallen well below the proposed bid value since Fairfax announced the offer a week ago. On Monday, the stock was down another two per cent, or 18 cents, to close at C$ 8.10 on the Toronto Stock Exchange.

The company’s shares have fallen nearly 13 per cent on the TSX since the Fairfax proposal was announced.