Blackberry's $4.7bn sale collapses, CEO axed and shares plunge

Business for the phone company Blackberry went from bad to worse with shares dropping by 16 per cent

16:07 05 November 2013

Blackberry saw its shares plummet by 16% after the smartphone brand scrapped a planned sale to its biggest shareholder, Fairfax Financial Holdings.

The firm instead plans to raise $1bn (£627m) in fresh financing themselves.

In a string of revelations, chief executive Thorsten Heins has also been axed and replaced by former Sybase chief executive John Chen as interim chief executive following diminished sales of its units, particularly its new Z10.

Blackberry reported a second-quarter net loss of $965m last month.

Around the same time, Fairfax spearheaded a consortium of firms in a proposed takeover thought to be worth $4.7bn - a plan which has now collapsed after they reportedly struggled to raise the cash for the deal.

Fairfax still have a 10% stake in the company and will grant the firm $250m to the new fund-raising scheme.

"This financing provides an immediate cash injection on terms favourable to Blackberry, enhancing our substantial cash position," said Barbara Stymiest, chair of Blackberry's board of directors as quoted by the BBC.

In September, Chen stated that: "Blackberry is an iconic brand with enormous potential - but it's going to take time, discipline and tough decisions to reclaim our success."

The firm will cut 4,500 jobs, which equates to 40% of its workforce.