DEALTALK-No love lost for BlackBerry, Watsa after surprise deal

Wed Nov 6, 2013 2:00am EST
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By Greg Roumeliotis and Euan Rocha

NEW YORK/TORONTO Nov 6 (Reuters) - BlackBerry Ltd's decision to accept a $1 billion cash injection from a group of investors led by Canadian financier Prem Watsa shocked other potential bidders for the smartphone maker and has left some investors crying foul.

With the investment deal, BlackBerry abruptly ended an auction process that many investors had hoped would have led to a sale of the company or some of its assets, ending a long decline in its fortunes as a public company. BlackBerry has bled market share in recent years, as it struggled to compete with Apple Inc's iPhone and devices running Google Inc's Android software.

The investment deal with the Watsa-led group gives BlackBerry more time to come up with a new turnaround strategy and installs a respected industry executive to lead the charge. BlackBerry CEO Thorsten Heins was ousted, and John Chen, credited with turning around Sybase Inc in the late 1990s, took the helm on an interim basis.

But investors are skeptical that time will solve the company's problems. BlackBerry has failed to win back customers despite refreshing its software and launching a new line of its once ubiquitous phones. They say the only person who can benefit from the deal is Watsa, who over the years has built a reputation as a shrewd investor, attracting comparisons to U.S. billionaire Warren Buffett, who often presented himself to companies as lender of last resort.

"Watsa didn't get where he is by paying retail, he knows how to pay wholesale prices," said Ross Healy, a portfolio manager with MacNicol & Associates whose clients own shares in BlackBerry.

Healy said most shareholders were disappointed, but he still hoped the company can turn its fortunes around.

Watsa, the chairman of Financial Holdings Ltd, said in an interview on Monday that the "for sale" sign at BlackBerry was coming down.   Continued...