Tarkett's Buy-Out Offer: A Fair Deal or Missed Growth Opportunity?

Tarkett Participation's revised €17 per share buy-out offer for minority shareholders has sparked debate over its fairness and long-term implications. While the premium appears generous on paper, the strategic calculus for investors hinges on evaluating both the immediate financial terms and the company's post-squeeze-out trajectory. Let's dissect the numbers, the risks, and the hidden incentives at play.

The Numbers: A 46% Premium, But at What Cost?
The revised offer—up from €16 initially—reflects a 46.1% premium over Tarkett's 60-day volume-weighted average price (VWAP) as of February 20, 2025. This premium has been validated by independent expert Finexsi, which deemed the terms “fair to shareholders.” A shows shares rising steadily to €17 by April, aligning with the offer price. For shareholders, the immediate appeal is clear: tendering now locks in a profit against the February lows.

However, the squeeze-out mechanism adds urgency. If minority holdings fall below 10%, Tarkett Participation can compulsorily acquire remaining shares at the same €17 price. This “sell now or risk forced sale later” dynamic creates a strategic crossroads. The question becomes: Is €17 a fair price for Tarkett's long-term potential, or does it undervalue growth opportunities post-delisting?

The Squeeze-Out Risk: Why Hold Out?
Tarkett Participation already owns 90.41% of the company, leaving just 9.6% in public hands. The squeeze-out threshold of 10% means shareholders who reject the offer risk losing control of their shares at the same price, with no chance to negotiate higher compensation. Historical data in France supports the inevitability of this outcome: 98% of squeeze-out attempts succeed when the buyer holds over 90% of shares.

The risks for holdouts are twofold. First, they lose the ability to sell at their preferred timing. Second, post-squeeze-out, Tarkett will no longer face the costs of maintaining a public listing—regulatory compliance, low liquidity (historically under 0.1% daily turnover), and shareholder reporting obligations. These savings could theoretically benefit remaining equity, but only if the company reinvests in growth.

Growth Prospects: The Undervalued Elephant in the Room
Here's where the offer's fairness becomes contentious. Tarkett's core business—specialty flooring for sports, healthcare, and commercial spaces—operates in a niche but resilient market. The company's ESG-aligned products, such as sustainable materials and modular systems, are gaining traction in a carbon-conscious economy. While not yet reflected in current valuations, these segments could drive margin expansion post-delisting.

Finexsi's fairness opinion focused on historical metrics, but its analysis may have overlooked Tarkett's innovation pipeline. For instance, the company's in synthetic turf and gym surfaces has won contracts with major sports leagues. Without public trading constraints, Tarkett Participation could accelerate R&D investments or pursue acquisitions to capture these opportunities.

The Investment Verdict: Take the Money, but Acknowledge the Trade-Off
The squeeze-out's inevitability makes resistance futile. Minority shareholders are better off tendering now to avoid being forced later at the same price. The 46.1% premium over the 60-day VWAP is compelling, especially given Tarkett's steady stock performance.

However, shareholders who believe in Tarkett's growth potential may feel shortchanged. The offer's reliance on backward-looking valuations risks ignoring forward momentum in ESG-driven markets. Yet, the absence of a “higher bid” from external buyers suggests limited external interest, weakening the case for holding out.

Final Recommendation
Tender your shares. The premium is substantial, the squeeze-out risk is existential, and the opportunity cost of holding a non-voting, soon-to-be-privatized stake outweighs the speculative upside of growth bets. While the offer may undervalue future potential, shareholders are not being asked to gamble—they're being paid to exit a position with diminishing liquidity and control.

The clock is ticking. For Tarkett's minority shareholders, this is a once-in-a-lifetime chance to cash out at a price that's mathematically fair, if not visionary.

Low liquidity reinforces the rationale for delisting.

Disclaimer: This analysis is for informational purposes only. Investors should conduct their own due diligence and consult financial advisors before making decisions.