Unlocking Value in Tarkett: Voting Rights Dynamics and Strategic Buybacks Signal Investment Opportunity

Tarkett, a global leader in flooring and sports surface solutions, has quietly positioned itself at the intersection of strategic governance and undervaluation. Beneath its sustainable product portfolio and €3.3 billion annual revenue lies a compelling story of voting rights consolidation and shareholder signaling. For investors, the numbers tell a tale of reduced dilution risk, potential undervaluation, and a governance structure primed to capitalize on market opportunities—albeit with risks tied to extreme ownership concentration.

The Voting Rights Paradox: A Dual-Class System or Strategic Buybacks?
Tarkett's voting rights structure defies simplicity: as of April 2025, exercisable voting rights totaled 123.78 million, nearly double its 65.55 million outstanding shares. This gap is not due to dual-class shares but rather the exclusion of 18,559 treasury shares—company-owned shares stripped of voting rights. While seemingly minor in count, these treasury shares underscore a deliberate strategy to consolidate control.

The math is clear: Tarkett's voting rights are calculated by applying a 1:1.89 ratio between shares and votes, likely reflecting historical capital structure decisions. However, the critical factor is that treasury shares are systematically removed from voting calculations, tightening the grip of existing shareholders. For investors, this means fewer shares in play and a lower risk of dilution from new equity issuances.

The Deconinck Family's Iron Grip: A Double-Edged Sword
The Deconinck family (fourth generation) and their partner, Wendel, hold 90.4% of Tarkett's capital and 94.7% of voting rights. This near-total control has been reinforced by a public buy-out offer priced at €17 per share, aimed at acquiring remaining minority stakes. The squeeze-out mechanism will further reduce liquidity, but it also sends a powerful signal: management believes the stock is undervalued.

Buying back shares (even small batches) reduces the float, elevating per-share earnings and potentially spurring upward momentum. With no stock options or warrants diluting ownership, the path to value accretion is unobstructed. Yet, the risks are stark: minority shareholders face diminished influence, and the delisting of Tarkett from Euronext Paris—if executed—could limit exit options.

Why Now? The Case for Investment
1. Undervaluation Signal: Management's €17 buy-out price implicitly values Tarkett at a premium to current market prices. Investors ignoring this risk undervaluing the company's circular economy initiatives and global scale.
2. Reduced Dilution Risk: With no active equity issuance plans and a shrinking float, capital preservation is prioritized.
3. Operational Agility: A concentrated ownership structure can accelerate strategic decisions, from R&D investments to market expansions.

Caution: The Perils of Extreme Ownership
While the buyback strategy is bullish, investors must weigh the risks:
- Minority Disadvantage: With 90% of shares already controlled, minority shareholders may see little influence over dividends or governance.
- Liquidity Risks: A delisted Tarkett could face thinner trading volumes, complicating exits.
- Compliance Scrutiny: French regulations (Article L233-8-II) demand transparency, but concentrated power may test oversight limits.

The Bottom Line
Tarkett's voting rights structure and buyback activity paint a compelling picture: a management team confident in its valuation, a shrinking float, and a governance model optimized for decisiveness. For investors willing to accept concentrated ownership risks, this is a rare opportunity to align with a stakeholder who already bets on undervaluation.

The squeeze-out offer, the exclusion of treasury shares, and the lack of dilutive instruments all point to a stock poised for upward revaluation. Act swiftly: as ownership consolidates, the window to capture this value may soon close.

Invest with conviction—but keep a watchful eye on liquidity horizons.