Ancora Holdings Group is looking to acquire the H.B. Fuller Company’s Building Adhesive Solutions (BAS) segment for between $1.1 billion and $1.2 billion in cash.
Ancora, an investment advisor with $11.7 billion in assets under management, is a significant shareholder in H.B. Fuller, the largest pureplay adhesives company in the world.
The activist investor has ramped up its campaign to acquire H.B. Fuller after Fuller announced plans to acquire Advanced Medical Solutions plc in June – a move that Ancora opposed.
“We have $11.7 billion in assets under management and a track record of raising additional as-needed capital thanks to our strong institutional and private client relationships. Our financial strength is supported by a deep bench of advisory and operating partners with experience across industrial sectors, including the specialty chemicals industry. It is disappointing that all of you seemed to overlook these facts when we tried to engage in good faith with H.B. Fuller before you irreversibly finalized the objectionable agreement for the pending acquisition of Advanced Medical Solutions plc,” Ancora officials wrote in an Aug. 12 letter to H.B. Fuller’s board.
In July, Ancora reached out to Fuller leadership to express interest in a “carve-out” transaction involving the Fuller’s Building Adhesive Solutions segment. However, the company has “not received a substantive reaction” from Fuller leadership on the proposal.
“We fear your collective preference for entrenchment is once again impairing your judgement and undermining shareholders’ best interests,” Ancora officials wrote.
They stated that an all-cash transaction for BAS could:
- Support and accelerate leadership’s stated deleveraging goals;
- Enable leadership to simultaneously increase its focus on the intended integration of AMS while continuing to execute on Project Quantum Leap;
- Position leadership to exit a segment that has lower margins in a highly fragmented market; and
- Solidify a potentially indefinite end to public activism.
Due to the factors and the view that shareholders would be very supportive of this type of transaction, Ancora formerly proposed to acquire the Fuller’s BAS segment for between $1.1 billion and $1.2 billion in cash. But having not received a “coherent or substantive response,” Ancora decided to go public with the offer to make investors aware of offer and the situation.
“We also believe our proposal carries an attractive purchase multiple. Given our familiarity with the BAS segment and experience in the sector, we would only require a customary due diligence window. We are prepared to immediately enter into a confidentiality agreement to commence and carry out this diligence,” the letter stated.
The letter was signed by Ancora Chairman and CEO Fredrick DiSanto and James Chadwick, president of Ancora Alternatives.
“We ask that the Board’s independent members finally let us know if H.B. Fuller wants to explore the contemplated transaction. Perhaps we were wrong in early July when we assumed that the company’s chief executive officer and chair were the right channels to communicate through. If there is interest, our respective legal advisors can connect about structuring a mutually agreeable confidentiality agreement that enables us to proceed with diligence associated with the acquisition. Rather than running a multi-year campaign to remove and replace several of you due to chronic underperformance, we hope to begin working together to deliver a truly win-win transaction for H.B. Fuller and its shareholders,” the letter concluded.
In its own release, Fuller acknowledged receipt of the unsolicited proposal to acquire BAS.
“Although Ancora previously expressed a passing verbal interest in BAS, the letter received today, simultaneous to the news being made public, represents the first offer that Ancora has made for this business,” Fuller officials said in a statement.
The H.B. Fuller board said it will carefully evaluate the proposal in consultation with its financial and legal advisors.