In spite of a preliminary agreement with Fairfax Financial to be acquired for $9 a share, BlackBerry (BB -0.69%) still trades well below the mark. While the proposed offer by Fairfax is not definitive, the market seems to be almost certain that the deal will not go through or that newer buyers will not emerge.

However, BlackBerry still has a lot of value for a potential strategic buyer. And even if that is not the case, the Canadian Buffett, Prem Watsa, has stated he is serious about taking BlackBerry private, and that he doesn't fool around with bids.

Fairfax deal should go through
Canadian insurance firm, Fairfax Financial, already owns 10% of BlackBerry, and the offer on the table values the entire company at $4.7 billion--or $9 a share. However, the enterprise value, or the takeover value, for BlackBerry is much lower. Due to the sizable cash balance of roughly $2.6 billion, BlackBerry's enterprise value for the Fairfax bid stands at $2.13 billion, which increases the probability that the deal with Fairfax will go through. 

BlackBerry has been selling well below book value for a while now. But its intellectual property, including smartphone patents, are worth more than $3 billion on the balance sheet, which makes the company a lot more lucrative for a potential acquirer. In fact, Fairfax might even pursue other economically feasible strategies like completing the acquisition, and selling off parts of the business, (like BlackBerry Messenger and patents), to other technology companies like Microsoft (MSFT 0.37%). 

In addition, Blackberry's CEO will get a very healthy pay-out for his efforts if the deal with Fairfax goes through, which makes it even more likely that a definitive agreement will be reached by November. 

Newer buyers are coming
BlackBerry's stickiness is extremely strong with enterprise customers. There is little doubt about BlackBerry's best-in-class secure devices, for which governments, banks, and major corporations deliver to their employees. And clearly, the market is heavily discounting the value associated with such prominence and its intellectual properties. 

As a result, it makes sense for Google (GOOGL 0.55%) to snap up BlackBerry for its IP and security portfolio. At $9, BlackBerry's enterprise value is low enough for Google to complete a transaction with little difficulty. Google has more than $54 billion in cash, and can easily buy Blackberry for its patents, handsets, and the BlackBerry messenger app.

Since Android is not known for its best-in-class security, the security-related patents of BlackBerry might prove to be invaluable for Google. And Google stands to realize more synergies by owning BlackBerry because of Motorola and Android's dominant market presence. 

Other than Google, Microsoft might be interested in snapping up BlackBerry as well. Even though Microsoft acquired Nokia's handset and devices business recently, it should go after Blackberry for the patents and existing customer base of enterprise customers.

With Microsoft's CEO stepping down, and a lot of cash in the bank, it might be interested in gaining more ground in the mobile devices business to try to keep up with Google and Apple. The demand for PCs fell for six consecutive quarters, and global unit sales are down roughly 9% in the third quarter, according to Gartner. 

In addition to Google and Microsoft, the co-founders of BlackBerry are gearing up to make a bid for their baby. The duo of Lazaridis and Fregin already own 8% of BlackBerry, and recently filed a 13D with the SEC stating that they are pursuing all alternatives, including a potential acquisition. And the co-founders are using Goldman Sachs and Centerview Partners as advisors for a potential transaction. 

An investable idea?
Since a competing bid for BlackBerry has to be greater than $9 a share, the probability of a larger bid, other than the Fairfax offer, is very high as it currently stands. As the price of BlackBerry stock is well below $9, the special situations desks in investment banks and hedge funds are almost certainly ready to take advantage of this opportunity.

In fact, special situations like these were a favorite of value investing pioneer, Ben Graham. He wrote in his famous book, Securities Analysis, "Special situations are the happy hunting grounds for the simon-pure analyst who prefers to deal with the future in terms of specific, measurable developments rather than general anticipations."

Ben Graham even laid out an excellent framework for evaluating special situations like BlackBerry and previously Dell, using a probability weighted framework, which he has used to earn hefty returns from merger bids and other event-driven scenarios. He even highlights a number of examples in which guaranteed returns of 15% to 30% can be realized from such special situations in a reasonably short period of time. 

The takeaway
With an existing bid in place for BlackBerry, and a number of other competing bids lining up, a Ben Graham type special situation exists. And you too can earn specific, measurable returns from such developments. Since a number of buyers are interested for BlackBerry, the downside risk from the current stock price of roughly $8 is limited. And a potential buyer, other than Fairfax, has to pony up well in excess of $9 a share to take BlackBerry private.