TORONTO (AP) — BlackBerry has abandoned its bid to sell itself and is replacing its chief executive.
Fairfax Financial, BlackBerry's largest shareholder with a 10 percent stake, said Monday it won't buy the struggling smartphone company and take it private. Instead, Fairfax and other investors will inject $1 billion as part of a revised investment proposal.
BlackBerry said CEO Thorsten Heins is stepping down. Heins took over in early 2012 after the company lost billions in market value, but he failed to turn the company around this year with the launch of BlackBerry's new devices.
Former Sybase Chief Executive John Chen was appointed chairman of BlackBerry's board of directors and will serve as interim CEO. Fairfax head Prem Watsa has also been named a board member.
BlackBerry announced in September that Fairfax Financial Holdings Ltd. signed a letter of intent that contemplated buying BlackBerry for $9 a share, or $4.7 billion, and taking it private. Fairfax said then it wouldn't increase its 10 percent stake and the company went about trying to attract other investors.
Watsa said Fairfax did due diligence and worked with a consulting company that recommended that taking BlackBerry private with borrowed money was not the way to go.
"To load this company with too much debt was not appropriate," Watsa told The Associated Press. "We didn't want it leveraged. We didn't even bother to go there. Once we decided that a leveraged buy-out with high debt was not appropriate we didn't push it any further. We backed off completely."
Watsa said BlackBerry needs financial flexibility. "We probably could do it, but we decided not to add high yield debt to the company's capital structure," he said.
He said five or six investors had been interested in a buyout.
The founders of BlackBerry, Mike Lazaridis and Doug Fregin, partnered with New York investment firm Cerberus Capital Management LP and cellphone chip maker Qualcomm Inc. on a rival bid for BlackBerry, two people familiar with the bid said. The people, who were not authorized to talk publicly about it, said the bidders wanted more time and more information to put a proposal together but were told the company was being taken off the market.
Shares of BlackBerry plunged 16.4 percent to $6.50 on the Nasdaq Monday.
Chen said he'll be looking for a CEO with a strong software and services background. He noted that BlackBerry Messenger, the popular messaging application, has been downloaded by over 20 million users since it became available on Google's Android and Apple's iOS platforms.