Business
Clarke Inc. Enters Into Agreement to Acquire Holloway Lodging Corporation
Clarke Inc. Enters Into Agreement to Acquire Holloway Lodging Corporation Canada N...
About this update from Clarke Inc.
[{"type":"text","content":"\n\n\n\nClarke Inc. Enters Into Agreement to Acquire Holloway Lodging Corporation\n\n/* Style Definitions */\nspan.prnews_span\n{\nfont-size:8pt;\nfont-family:\"Arial\";\ncolor:black;\n}\na.prnews_a\n{\ncolor:blue;\n}\nli.prnews_li\n{\nfont-size:8pt;\nfont-family:\"Arial\";\ncolor:black;\n}\np.prnews_p\n{\nfont-size:0.62em;\nfont-family:\"Arial\";\ncolor:black;\nmargin:0in;\n}\n\n\n\n\n\n\n\nCanada NewsWire\nHALIFAX, Aug. 9, 2019\n\n\n\nHALIFAX, Aug. 9, 2019 /CNW/ - Clarke Inc. (TSX: CKI) (\"Clarke\") and Holloway Lodging Corporation (TSX: HLC, HLC.DB) (\"Holloway\") are pleased to announce that they have entered into an arrangement agreement (the \"Arrangement Agreement\") pursuant to which Clarke has agreed to acquire all of the common shares of Holloway (the \"Holloway Shares\") that it does not currently own (the \"Acquisition\").\nPursuant to the Arrangement Agreement, Holloway shareholders will receive for each Holloway Share they own 0.65 of a common share of Clarke (the \"Clarke Shares\"). Based on the closing share prices of each of Clarke and Holloway on August 8, 2019, the day prior to this announcement, this share exchange ratio implies an acquisition price per Holloway Share of $8.46 and a premium of 14%. \nThe Acquisition is valued at approximately $132 million on an equity value basis and $265 million on an enterprise value basis. This implies a price per hotel room of approximately $88,200 (after excluding the value of Holloway's vendor takeback mortgages and office properties) and a cap rate of 6.4% (after taking into account the interest income on Holloway's vendor takeback mortgages, the annualized negative cash flow associated with Holloway's office properties and Holloway's corporate overhead). \nClarke expects to issue approximately 4,940,193 Clarke Shares as consideration under the Acquisition, following which Clarke expects to have outstanding 16,962,422 Clarke Shares.\nVoting Support Agreement\nClarke currently owns 51% of the Holloway Shares. Clarke has received expressions of support for the Acquisition from holders of an additional 32% of the Holloway Shares, including Letko, Brosseau & Associates Inc. (\"Letko\") which exercises control or direction over 20% of the Holloway Shares and which has entered into a voting support agreement pursuant to which it has agreed to vote its Holloway Shares in ...