Activist Disputes Tarkett Sommer's Buyout Plan

Montreal, Canada, July 16--Shareholder rights activist Stephen Jarislowsky has accused French-German flooring company Tarkett Sommer AG of making a "totally unfair" offer to buy out the minority shareholders of its publicly traded Canadian subsidiary, Domco Tarkett, as reported in the Financial Post. The European company bid $7.50 per share on April 30 to buy the 25.6%, or 6.5-million shares, of Domco Tarkett shares it didn't own. If less than 90% but more than half of the shares are tendered, the bidder plans to call a special meeting to consider one of several means to force the purchase of the holdout shares, as is allowed under Canadian law. The deal for Domco, based in Quebec's Eastern Townships, offers a healthy premium of 43% to the prior day's close and 34% to the weighted average in the previous six months. RBC Dominion Securities Inc. told a special committee of independent Domco directors the offer falls within its "fair market value" range of $7.50 to $8.75 a share, and the Canadian company's board yesterday recommended minority shareholders accept the bid by the Aug. 8 expiry date. But in a letter to Quebec Securities Commission chairman Pierre Godin, Jarislowsky--chairman of money management firm Jarislowsky Fraser Ltd.--blasted the offer, saying it "extends the oppression of Domco shareholders that goes back many years. "Not unlike Ford of Canada, Dupont of Canada and many others this is yet another oppressive action to buy back shares of minority Canadian holders at bargain prices," wrote Jarislowsky, whose firm manages 345,000 Domco shares on behalf of clients. Domco's chief financial officer, Jacques Bénétreau declined comment yesterday. Jarislowsky's complaint is based on several contentions, including the fact the offer is below the company's book value of $10.25 a share. But he also accused Tarkett Sommer of moves in recent years that denied minority Domco shareholders a better return. Tarkett Sommer in 1997 rejected a hostile bid by Lancaster, PA based Armstrong World Industries Inc. for Domco at $23 a share and a sweetened offer for $26.50. Tarkett Sommer then merged its U.S. arm with Domco in 1999 in a deal that added $100 million in debt to Domco's balance sheet. At the time, Jarislowsky blasted the deal as unfair to Domco minority shareholders, calling the U.S. firm "poorly managed." Domco stopped paying a dividend in December 2000 before reinstating it last December. Its shares have drifted from the high teens in the late 1990s to less than $4 by early 2001. They have since traded for less than $8.

Related Topics:Armstrong Flooring, Tarkett

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