Lost in the midst of all the hoopla surrounding the resignation of Stephen Ross was a distinct pop in the stock of ClubLink Corp., the corporate golf giant that controls more than 35 courses in Ontario and Quebec.
According to a CP story:
ClubLink said Robert Poile, Paul Atkinson, 1548795 Ontario Inc., a subsidiary of Southwest Sun Inc., and Keofferam Limited Partnership have agreed to transfer their stock to a numbered company.
For those that don’t know, Poile is the CEO of the company (and a large stakeholder) and Atkinson represents a partnership that controls one of three large voting blocks of shares. The other third is controlled by real estate baron and takeover specialist Rai Sahi. A clarification to the initial press release had this to say:
The press release also disclosed that, following the acquisition by Newco of the Shares, the Shareholders have agreed that Newco will not vote or take any action with respect the Shares without the approval of the holders of not less than 66.6% of the Newco Shares.
ClubLink was advised that the Shares will be acquired by Newco for investment purposes and that Newco does not have any present intention to acquire ownership of, or control over, additional securities of ClubLink.
While “Newco” may not be looking to acquire additional securities, this would appear to me to be a move to take the company private. That wouldn’t be a huge surprise — after all, ClubLink shares have not moved much in several years and the company would appear to think they are undervalued.
It will also be interesting to see what moves ClubLink would make if it did not have to answer publicly to shareholders. How this would impact its strategy and its members is an intriguing question.
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I think the motivator to the transaction is to ensure the shareholders involved act/vote like a block. I think the group as a whole owns 39% of outstanding shares of Clublink. This is a large block, and the group acting in concert has effective control over the administration and managment of Clublink.
Whether this is an indicator of an ultimate intention to go private is interesting. Clublink has approximtely 17M shares outstanding. This block controls 6.5M shares. To go private, the group would have to buy the remaining shares, or approximately 10.5M shares. Current fair value is about $12/share. The group would likely have to offer premium, of about 35% or so. This would place the bid per share at about $16 share. The block of 10.5M shares would cost $168M. In my opinion, based on my understanding of Clublink’s ability to generate cash, that would be an interesting proposal.