Clarke / Slow-motion privatization

Clarke (TSX: CKI) is George Armoyan’s publicly traded holding company. On September 15, 2020 he owned 10,399,101 shares of 15,697,324 outstanding (66.25%).

Since then, the company has managed to retire 639,432 shares through buybacks and 363,893 of those shares was through a creative 1:1000 reverse split and split, repurchased at $5.60/share on October 20, 2020. Shares outstanding has been reduced to 15,057,892.

As a result, Armoyan’s ownership has risen to 69.1%.

Letko, Brosseau & Associates Inc. owns 2,345,308 shares, or 15.6%.

Thus, the public float available is 2,952,915 shares.

Today, Clarke announced:

HALIFAX, NS , Jan. 21, 2021 /CNW/ – Clarke Inc. (“Clarke” or the “Company”) (TSX: CKI) (TSX: CKI.DB) today announced its intention to commence a substantial issuer bid (the “Offer”) pursuant to which the Company will offer to purchase up to 1,150,000 of its outstanding common shares (the “Shares”) at a purchase price of $7.00 per Share in cash (the “Purchase Price”).

The Purchase Price represents a 6.3% premium over the 30-day volume weighted average closing price of the Shares on the TSX for the period ending on January 20, 2021, being the last full trading day prior to this announcement. The number of Shares subject to the Offer represents approximately 7.64% of the total number of Shares outstanding.

Considering that Clarke last traded today at C$7.04/share (all of 500 shares), I have my doubts whether this offer will be subscribed to any real extent unless if Letko wants to get liquidity on its stake (which will be nearly impossible to unload in the open market).

My impression is that this is a continuation of a slow-motion takeover before Armoyan decides to just buy everything at a modest premium. Maybe the minority shareholder fleas will get another dollar or two out of the stock, but the time for Clarke as a publicly traded entity is soon coming to a close.