Investing.com - " Blackberry shares plunged in early trade on Monday after the Canadian smartphone maker announced that a merger agreement with its largest shareholder Fairfax Financial Holdings had collapsed.
Shares in Blackberry dropped 10.68% to USD6.93 in early trade on the Nasdaq, from a close of USD7.77 on Friday.
Instead of acquiring the company, Fairfax and a group of other investors will invest USD1 billion into bonds which can be converted into shares. Fairfax is to purchase USD250 million of the bonds.
Under the terms of the new agreement chief executive officer Thorsten Heins is resigning. John Chen, the former chief executive of Sybase is to be appointed as acting CEO with responsibility for the company's "strategic direction, strategic relationships and organizational goals."
"The BlackBerry board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders," company chairman Barbara Stymiest said in a statement.
"This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position," she added.
In September, BlackBerry had agreed to be taken over by a consortium led by Fairfax, for USD4.7 billion. At the time, the chairman and chief executive of Fairfax Prem Watsa resigned from the smartphone maker's board. He is now to return to the board as lead director.
"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," Mr. Watsa said in a statement.
"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."
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