Pension funds mulling over Fairfax bid for BlackBerry

Parties interested only if firm splits up, sources say

TORONTO — Two of Canada’s largest pension funds have held preliminary discussions with Fairfax Financial Holdings Ltd. about its bid for BlackBerry Ltd., yet are holding off from the effort because they only want pieces of the smartphone maker, two people familiar with the talks said.

The Ontario Teachers’ Pension Plan and the Alberta Investment Management Corp., which together manage about $ 198 billion, are targeting BlackBerry’s secure server network and other business units, the people said. The funds negotiating with Fairfax aren’t interested in backing a bid for the whole company and haven’t joined the bidding consortium yet, said the people, who asked not to be identified because the talks are private.

Fairfax, the largest shareholder of BlackBerry, announced Sept. 23 it was leading a group of investors planning a buyout of the money- losing smartphone maker. Fairfax chief executive officer Prem Watsa declined to name the investors in the group, saying it had a strong Canadian component.

That points to Canadian pension funds such as Ontario Teachers’ and AIMCo, as the Edmonton- based fund is known, said Kevin Stadtler, president of Stadtler Capital Management LLC in Texas. Other funds including Canada Pension Plan Investment Board, the largest pension manager with $ 188.9 billion under administration, and Caisse de Depot et Placement du Quebec, the second- largest, have said in the past six weeks that they would look at BlackBerry.

“There is a fairly big financing risk if the Canadian pension funds are not involved,” said Greg Taylor, a portfolio manager at Aurion Capital Management in Toronto. “The problem is the core business has eroded so quickly that it’s hard to make a case this is a good stable business that would fit their liabilities.”

Deborah Allan, spokeswoman for Ontario Teachers’, declined to comment as did Denes Nemeth, spokesman for AIMCo, Linda Sims at Canada Pension, Jean- Benoit Houde at Caisse de Depot, and Lisette Kwong at BlackBerry.

BlackBerry fell for a second day on concern that Watsa may fail to win support for his $ 9 a share cash bid. Fairfax has agreed to put up its 10 per cent stake in BlackBerry for the offer, and needs to find equity and debt investors for the rest.

Of the Canadian pension managers, Toronto- based Ontario Teachers’ held the most BlackBerry stock, with 1.97 million shares at June 30 worth $ 17.3 million Tuesday, according to data compiled by Bloomberg.