U.K.-based Quarto Group has issued an official stock market announcement giving notice that it intends to give up its listing on the London Main Market. A shareholder meeting will be held on December 14 to approve the delisting proposal, which needs support of 75% of shareholder votes to be passed. Shareholders representing 72% of the company's shares already support the delisting, and the measure has the backing of executive director CK Lau's whose 1010 Printing Limited of the Lion Rock Group has just over 50% of Quarto's shares.
In making the announcement, Quarto cited four primary reasons for the delisting:
- the delisting will result in "certain costs savings, plus administrative and transactional efficiencies"
- the company will "gain the flexibility to close future acquisitions more quickly without having to comply with the listing rules"
- the company's common shares "historically have a low average daily trading volume, which makes the company's share price susceptible to significant fluctuations after trades involving small numbers of shares"
- the company's common shares "suffer from limited liquidity and a low free float of approximately 17%, which limits the benefits that the company can gain from accessing capital through the London Stock Exchange
While the delisting is unlikely to impact day-to-day operations, news of the pending move hammered Quarto's stock price, which fell 38%, to £0.75, or roughly a dollar, per share on Thursday. Quarto said that it intends to make a tender offer for shares, so that investors who wish to cash out after the delisting can do so.
Though headquartered in London, Quarto's largest market is the U.S., and in comments in its circular announcing the delisting plan, Quarto pointed to challenging worldwide market conditions, including in the U.S.: "'Quarto achieved strong financial results in 2021 and 2022, but it has since faced the post-Covid downturn of the global book market in 2023. Consumers shifted their spending from discretionary items such as books to essential items such as food and fuel, as they faced economic uncertainty."
The post notes that, according to Circana BookScan, print sales in the U.S. in Quarto's two biggest segments, adult nonfiction and children's, are down 5% and 6%, respectively. It stresses that, given the softer sales, "the company needs more management flexibility to adapt to these changes and respond quickly to new opportunities and challenges," which a delisting will provide.
In late August, Quarto reported that sales for the first six months of the year fell to $52.0 million in the first half of 2023, from $61.9 million in 2022, with pre-tax profits slumping from $6.6 million to $2.6 million over the same period.