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Unless you run an underperforming mid-size Canadian company or income trust, the name George Armoyan might not scare you.
But if your business is on the ropes and Armoyan calls up to request a meeting, you'll want to freshen up your resumé.
Yves Simard, the CEO of the ailing swimwear chain Groupe Bikini Village, was well aware of Armoyan's reputation when he arrived at the retailer's HQ outside Montreal one day this past spring. The chain was facing an uncertain future as one of the remnants of the collapsed clothing retailer Les Ailes de la Mode, brainchild of Montreal entrepreneur Paul Delage Roberge.
Simard chuckles as he recalls his nervousness prior to the four hours of meetings he and Roberge had with Armoyan. "It was not the earthquake that we expected, but [Armoyan] dropped on the table what he had to drop," says Simard.
'A lot of people are pleasantly surprised when they first meet me,' says Armoyan. 'I don't have horns.' (Angus Rowe MacPherson)
Over the past three years, the 47-year-old Armoyan has been on a tear, seizing control of a dozen mostly beaten-up but asset-rich companies, including Versacold Income Fund, a refrigerated warehousing/trucking outfit; Royal Host Real Estate Investment Trust, a hotel owner and franchisor; and General Donlee Income Fund, which makes aircraft components. Armoyan's modus operandi is the same in almost every case: He quietly starts accumulating shares through his principal public investment vehicle, Clarke Inc. Then, when he crosses the 10% threshold that requires him to publicly disclose his holding, he demands seats on the target's board of directors and input into management. The goal is to gain control and then engineer a turnaround, or sell off the company for a profit as soon as opportunity knocks.
Armoyan has no tolerance for what he calls "bullshit and bureaucracy." But he offers managers in his sights a carrot: "I tell them, 'My objective is to make you guys as rich as possible—as long as shareholders become rich too.'" If the managers don't play ball, he tells them, "Your talents should be used elsewhere." And he'll wage a proxy fight to replace unco-operative directors, if necessary.
In the case of Versacold , Armoyan, Simard and Roberge eventually hammered out a strategic plan. Then, at the company's AGM in June, shareholders elected three Armoyan-backed candidates to the board. Simard stayed on as CEO, but, in August, Roberge reverted to being just a director, and textile executive Mardiros Ounanian, who is also Armoyan's brother-in-law, was named chairman. Armoyan was in the driver's seat yet again.
The mere news that Armoyan has taken a position in a company is now enough to prompt copycat investors to start buying, which drives up share prices—what one analyst called the "Armoyan Effect." And now that Armoyan has relocated from Halifax to Bay Street, the deals are getting bigger. The maverick raider wants to transform Clarke into a mainstream player with a stock market value of $1 billion by 2010.
So is it time to tone down the bad-boy image? "A lot of people are pleasantly surprised when they first meet me," Armoyan says. "I don't have horns." He may not want word to get around. After all, being abrasive has worked fabulously well to date.
Armoyan has been searching for angles and opportunities since he was a kid. He was born in 1960 in the Syrian port city of Tartous, the first of three children. His father, Sami, was a watchmaker, and his mother helped out in the shop. As a boy, George set up a little stand in front of the store to sell candy. "Even then, I enjoyed trading and negotiating," he says.
Armoyan's grandparents, Armenian Christians, fled Turkey following the genocide of 1915, when an estimated 1.5 million Armenians died. Armoyan speaks Armenian, Arabic and Turkish—although he only visited Armenia for the first time this past summer. However, he says, "two Armenians inspire me": One is Calouste Gulbenkian, who gained renown—including the sobriquet "Mr. Five Percent"—for his deftness as a middleman between Western oil companies and Turkish and Iraqi oil interests after the First World War. The other is billionaire corporate raider Kirk Kerkorian.
In 1976, Armoyan's father sent him to live with an aunt and uncle in Boston; the rest of the family followed a few years later. When it came time for George to go to university, the family couldn't afford Harvard or other elite U.S. schools, but Lebanese friends in Halifax suggested the city's own Dalhousie University.
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