Clarke announces results of tender offer

Clarke announced the results of their second tender offer this year. Unlike the first tender offer they managed to buy back a meaningful amount of shares. In the first tender offer for CA$9.50/share they bought 3.4% of the outstanding shares while they bought 12.6% of the outstanding shares in the second tender offer for CA$10/share. The offer was oversubscribed which allowed the company to repurchase an additional 2% of the outstanding shares. Buying back your own shares at a sizable discount is an easy way to make money, and as a result of the two transactions book value per share is now 3.9% higher than at the start of the year:

The Offer was an accretive transaction for Clarke as the Shares acquired under the Offer were purchased at a substantial discount to the Company’s book value per Share. Adjusting the Company’s $12.57 book value per share at December 31, 2014 solely for the effects of the Offer and the Company’s previous substantial issuer bid that was completed on January 26, 2015 , Clarke’s pro forma book value per share at December 31, 2014 was $13.06 .

This is exactly why I like Clarke as an investment. You can win when the discount to NAV shrinks, or you can win when the company creates value by repurchasing shares at a discount.

Disclosure

Author is long Clarke

8 thoughts on “Clarke announces results of tender offer

  1. Miguel Marecos

    Thanks for calling my attention to this one! I think it’s a very good opportunity to make some “safe” money!!

    Reply
  2. Eric

    Shall CKI try again at $10.50?

    During the Normal Course Issuer Bid they had been buying back shares as high as $10.50 in late 2014 as per Canadian Insider.

    Reply
    1. Alpha Vulture Post author

      Perhaps, but I would expect them to slow down with share repurchases: their cash balance isn’t infinite and they probably want some dry powder for other opportunities as well.

      Reply
      1. Eric

        Makes sense.

        Are they around $40-50 mill cash in hand after this latest tender offer + divy from Holloway and Terravest?

        Reply

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