The Board of Directors for the H.B. Fuller Company, the global leader in pureplay adhesives, again unanimously rejected a second and higher offer from Ancora Holdings Group LLC to buy its Building Adhesive Solutions (BAS) business.
“The board determined that the modest offer price increase does not adequately capture the value of the BAS business, including its organic growth momentum, the significant role it plays within H.B. Fuller’s broader platform, and the upside inherent in it from Project Quantum Leap,” H.B. Fuller said in an Oct. 19 statement.
Ancora last month increased its proposed price for BAS to between $1.2 billion and $1.4 billion in cash from its original offer in August of between $1.1 billion and $1.2 billion.
However, following “a thorough review supported by independent financial and legal advisors,” H.B. Fuller said Monday that its board voted unanimously to reject Ancora’s second unsolicited, non-binding proposal to acquire its BAS business, noting that the offer also “continued to lack key details, leaving the board to conclude the terms to be highly conditional.”
At the same time, H.B. Fuller said its board continues to evaluate all opportunities to maximize value for all shareholders — Ancora being one such shareholder.
“To that end, the company has determined it will conduct a market check involving select market segments and product lines that are less integral to its portfolio and strategy, with the intent to use any proceeds towards deleveraging,” H.B. Fuller said.
As part of this process, the company now says it will “carefully consider the feasibility of separating certain market segments,” including any stranded costs, tax implications, dis-synergies, and impact to execution of Project Quantum Leap, H.B. Fuller’s enterprise-wide, multi-year manufacturing and distribution optimization initiative.
Ancora has argued that H.B. Fuller needs to take steps to reduce its debt and improve shareholder value, and has attributed the company’s declining stock price to investor concerns about its debt, financial performance, and valuation.
In fact, according to Ancora, selling the BAS business would provide a way to pay down some of H.B. Fuller’s debt, which Ancora has described as the “most pressing concern.”
“We estimate that a sale of the BAS segment represents the most efficient way to accelerate the company’s leverage reduction and reduce H.B. Fuller’s balance sheet risk for shareholders,” according to a Sept. 29 letter Ancora Chairman and CEO Fredrick DiSanto and James Chadwick, president of Ancora Alternatives, sent to H.B. Fuller’s board members.
DiSanto and Chadwick had said their higher offer reflected both the value of the BAS business and the need to reduce H.B. Fuller’s debt.
“As was the case in August, Ancora remains committed to helping the company address its multitude of challenges and deliver sustainable value creation for H.B. Fuller’s long-suffering shareholders,” the two wrote.
H.B. Fuller said it expects to complete the market check by the end of this year.