After BlackBerry (NASDAQ: BBRY) announced it would go on the auction block, the deal announced on September 23 to have a consortium led by its largest shareholder, Fairfax Financial (NASDAQOTH: FRFHF), buy the remaining 90% of the company it didn't already own for $9 a share should have been good news. Following the dismal preliminary earnings results that BlackBerry shared on September 20, $9 a share may not have been a godsend, but it wasn't too far out of line.

Upon closer examination, there's still a lot that could go wrong with the offer. Now add in BlackBerry's shrinking stock price since the acquisition news broke, the cancellation of its management call following Friday's scheduled earnings release, and BlackBerry CEO Thorsten Heins' ridiculously large golden parachute, and it's no wonder investors are feeling some angst.

The deal
Upon further review, Fairfax's offer of $9 a share, equal to about $4.7 billion, is full of gaping holes. For example, the letter of intent Fairfax signed is subject to "due diligence, negotiation and execution of a definitive agreement." In other words, it has six weeks to decide if it really wants to buy BlackBerry, with no penalty for walking away.

However, if BlackBerry accepts a better competing offer before November 4, the end of the due-diligence period, it's on the hook to Fairfax for $0.30 a share, or about $157.3 million. If BlackBerry does end up signing a definitive agreement with Fairfax and then backs out for a better deal, it will owe Fairfax $0.50 a share, approximately $262 million.

There's also the not-so-small matter of Fairfax getting financing for the deal. In essence, all the Fairfax offer did was lay the foundation for competing offers, assuming there's anyone out there interested. If not, Fairfax can simply walk away before the November 4 cutoff with no harm done, except to shareholders.

Shareholders are not amused
The 17% drop in BlackBerry's share price after it announced preliminary earnings for fiscal 2014's second quarter was understandable. A mere 3.7 million smartphones sold, a nearly $1 billion inventory write-off, and dismal second-quarter revenue of approximately $1. 6 billion are not what shareholders had hoped to hear, so a sell-off was warranted.

But here's where BlackBerry's stock price movement gets strange. In each of the days following the September 23 announcement of the Fairfax "offer," BlackBerry's stock has declined -- closing at $8 a share on Wednesday. Wait, isn't there a deal on the table for $9 a share? Clearly, I'm not the only one questioning the commitment behind a deal between Fairfax and BlackBerry. It appears investors are finding it lacks conviction, too.

I'd rather not say
Public companies aren't required to host management calls after announcing earnings. They just do. Well, most of them anyway. BlackBerry said Wdcndsday it will skip the discussion that usually follows earnings news due to "the letter of intent agreement between BlackBerry and Fairfax Financial." Obviously, BlackBerry doesn't want to discuss the Fairfax deal, let alone its poor second-quarter financial results. Not exactly consistent with a company excited about what could be a lifesaving acquisition.

Though it likely has little to do with the Fairfax arrangement, it's intriguing at least that Heins, should he be ousted from his position because of a sale this year, would get a $56 million payday. That's up from $21 million if BlackBerry had been sold in 2012. Along with a wishy-washy offer, depressed stock price, and poor financial results, Heins' "double trigger" payout leaves a bad taste.

As with any financial decision, Foolish investors need to weigh the risk versus the potential for reward. In the case of BlackBerry, the reward, should the Fairfax deal actually happen, would result in about a 10% gain at its current share price. The risk is the nosedive BlackBerry's share price would probably take should the deal with Fairfax fall apart and no other suitor emerges. Why? Because If BlackBerry isn't attractive at $9 a share, let alone higher, and earnings continue to take a beating, it's going to get ugly.

The Fairfax offer feels more like a benchmark for other potential suitors to start bidding from, not a sincere offer. Fairfax and BlackBerry have rolled the dice, but it's not a game investors should play.


A better offer
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Fool contributor Tim Brugger has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.