Shareholder Disputes Revised Bid For Domco

Montreal, Aug. 20--The board of flooring company Domco Tarkett Inc. yesterday recommended minority shareholders accept a sweetened bid by the majority shareholder to buy them out, but one prominent investor said the revised offer is inadequate. In April, French-German company Tarkett Sommer AG, offered $7.50 per share to buy the 25.6% of Quebec-based Domco, or 6.5 million shares, it didn't own. Last week it raised the bid to $7.75 and said 66% of minority shares have been tendered. But Jarislowsky Fraser Ltd., which owns 345,017 shares (5.3% of the minority stake), is holding out. President Len Racioppo said yesterday the offer is too low--the book value is $10.25 per share--and based on a fairness opinion by RBC Dominion Securities Inc. "that is by and large a farce...Because it's not a fair opinion, it shouldn't be on the table." Jarislowsky Fraser chairman, Stephen Jarislowsky last week wrote to Pierre Godin, the president of the Quebec Securities Commission, repeating a long-standing criticism that fairness opinions in such cases "should be done by true independents and should be done by impartial or 'buy' side analysts...financial intermediaries (brokers, underwriters) and businesses (companies) have succeeded in loading the dice against investors and so regular 'rip offs' become the rule rather than the exception, aided and abetted by security [sic] commissions." Domco has said if more than half but less than 90% of the minority shares are tendered, Tarkett Sommer plans to hold a special meeting to consider one of several means to force the purchase of the holdout shares, as is allowed under Canadian law. "We've been very disappointed we have not been able to get any held from the authorities on this one," Racioppo said. Similar campaigns have succeeded to privatize Canadian divisions of Ford Motor Co. and E.I. Du Pont De Nemours and Co. Tarkett Sommer in 1997 rejected a hostile, $23-per-share bid for Domco shares by Armstrong World Industries Inc. Instead, the European company merged its heavily indebted U.S. division with Domco in 1999. The merged company suspended its dividend for two years, and the shares drifted from the high teens to less than $4 by 2001. They have since traded for under $8.

Related Topics:Armstrong Flooring, Tarkett

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