Tenon Ltd ("Tenon") (NZSE:TEN) In our last quarterly letter, I offered the following comment on our investment in Tenon:
"With regard to its New Zealand operations, Tenon announced several weeks ago that it had entered into exclusive discussions with an interested party with the intention of arriving at a binding sale transaction. Should a transaction be consummated, Tenon would cease to have any business operations and would go through a liquidation and wind-up process with the transaction proceeds again distributed to shareholders. We expect that distributions from such a process are likely to represent a meaningful premium the company's current share price."
In February, Tenon announced the expected transaction and its intention to proceed with a capital distribution and liquidation process as expected. However, the agreed upon sale price of this business was a disappointment to me. My estimation of the value a private buyer would be willing to pay for this business was apparently optimistic and therefore simply incorrect. As a result, Tenon made a modest negative contribution to our performance during the quarter. The company intends to distribute the vast majority of the liquidation proceeds in April and the residual tag-end distribution by year end. This process is expected to bring closure to our nearly eight year investment in Tenon. In spite of this last bout of disappointment the investment overall produced very positive results.
From Third Avenue International Value Fund first quarter 2017 shareholder letter.
