When I entered my position in Clarke in the beginning of December I wrote the following:

Given the large cash balance after the sale of Supremex there might even be more in the cards than just the current repurchase program.

This proved to be a prescient comment since the company announced a sizable tender offer yesterday for 2.5 million shares at a price of $9.5. The 2.5 million shares represent 12.8% of the outstanding shares, and given the ~30% discount to NAV this transaction could provide a nice boost to intrinsic value. If they are able to repurchase 2.5 million shares NAV per share (adjusted for unrecognized pension assets) would increase with 4.35%. That’s an easy way to make money. Whether or not they will be able to repurchase the full 2.5 million shares remains to be seen since they are offering a small premium compared to the last trading price.

Disclosure

Author is long Clarke Inc