Prem Watsa’s Fairfax Financial Holdings Ltd. has tread where others have apparently feared to go, offering a conditional $4.7 billion (U.S.) to buy smartphone maker BlackBerry Ltd. days after the company forecast a $1 billion loss and said it would cut more than one third of its workforce.

Watsa, who stepped down from the BlackBerry board last month to avoid any perception of conflict as he cobbled together an offer, said the deal “opens an exciting new private chapter for BlackBerry, its customers, carriers and employees.”

It comes after the Waterloo-based company first hired investment bankers in 2012 to explore options including a sale, with no formal offers forthcoming until Monday.

Watsa and a consortium of investor led by Fairfax “can deliver immediate value to shareholders,” while it focuses on leveraging BlackBerry’s reputation for secure software services targeted at business.

Shares in BlackBerry reversed more than 20 per cent in losses since the company issued an earnings warning Friday.

Shares closed up 9 cents at $8.82 in New York, with the close just below the offering price. Analysts at Wells Fargo said they doubt a competing offer will emerge.

Despite tepid sales of its new line of smartphones the company retains value in services, such as its social messaging app, said Carolina Milanesi, consumer technologies research vice president at Gartner.

The BBM app generated more than one million free downloads in eight hours after it was leaked over the weekend in advance of the company’s official rollout across Apple and Android devices.

BlackBerry also holds patents with an estimated value of $2.5 billion along with cash of about $2.6 billion and no debt, although its liquid assets have diminished with operating losses in recent quarters.

Milanesi said cost cutting and a writedown of unsold devices creates a leaner, more efficient operation, while the offer’s valuation at $9 per share represents a modest premium over BlackBerry’s closing average closing price over the past 30 days.

And even though the deal is non binding BlackBerry would have to pay the Fairfax group a $157 million break fee under certain circumstances if it agrees to a deal with another buyer.

But while delisting from stock exchanges offers advantages in that it removes the company from public scrutiny while its works on a turnaround, analysts say the move is no panacea and caution that a breakup still looms.

“This not about taking the company private like Dell to fix the business,” Milanesi said.

“This is about taking the company private and cutting the losses. I don’t see how we can expect more BlackBerry devices in the market.”

BlackBerry’s and Fairfax, its largest shareholder with a 10 per cent stake, say they had signed a letter of intent approved by the BlackBerry board that would see a consortium acquire all of the company’s outstanding shares. BlackBerry could continue to entertain any competing offers under a “go-shop” provision while Fairfax conducts due diligence until Nov 4.

The friendly deal is continent on conditions including Fairfax’s ability to secure financing. It involves a group of investors that could include private equity and pension funds or even former BlackBerry co-CEO Mike Lazaridis, although consortium members have not been identified. The New York Times on the weekend said Lazaridis has approached two U.S. private equity firms about making a possible bid.

Lazaridis could not immediately be reached for comment and analysts said they believe Fairfax is looking to raise equity for the purchase from investors in Canada.

The consortium does not include a tech company and Milanesi said she doubts Fairfax, a financial services firm focused on insurance, can do what BlackBerry could not.

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“The most likely scenario is that they’ll break up the different assets,” through sales and spinoffs and keep backbone network and messenger assets, she said.

BlackBerry intends to sell its corporate jets as it seeks to slash operating costs by half and observers speculate that it could divest holdings such as its QNX software division that makes products for the car vehicle infotainment and other markets, along with real estate in Waterloo. The company could also wind down its handset division.

Milanesi said she has no idea if Fairfax would keep the current management team.

Macquarie Capital analyst Kevin Smithen said BlackBerry needed to accept a low offer quickly “before liquidity becomes an issue and valuable enterprise services customers depart en masse.” The company is slated to report second quarter results Friday.

BlackBerry in its profit warning said it would refocus its business on providing services to corporate customers, a move some analysts called too little too, late in light of mounting competition in enterprise device management.

Milanesi said the philosophy behind taking BlackBerry private is to safeguard what’s left of the value in the company.

BlackBerry shares are worth about half of their value before the start of the year when the company launched its new family of smartphones operating on proprietary software called BB10.

The BB10 devices have been generally well received by tech reviewers but have received a cool consumer reaction in key markets including the U.S.

Measurement company comScore, however, said Monday that BlackBerry still had a 19 per cent share of the Canadian smartphone market as of June, although the share has diminished.

The company’s was the dominant smartphone maker in North America as late as 2010 but its share of U.S. sales has fallen below 3 per cent according to IDC.

The decline followed delays in releasing its new platform, marketing missteps and the ascent of the Apple iPhone and a raft of devices using Google’s free Android software across BlackBerry’s traditional strongholds of professional and emerging markets.

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