H.B. Fuller Co. (NYSE:FUL) shares were unchanged in Monday’s pre-market trading after the company’s board rejected an unsolicited offer from Ancora Holdings Group worth up to $1.2 billion for its Building Adhesive Solutions business, according to Bloomberg, citing people familiar with the matter.
The board determined that Ancora’s proposal materially undervalued the division and failed to adequately reflect its future growth prospects, the people said.
Directors also reportedly concluded that the bid did not recognise the strategic importance of Building Adhesive Solutions within H.B. Fuller’s wider adhesives portfolio and lacked sufficient information from Ancora to constitute an actionable proposal.
Ancora Criticises H.B. Fuller’s Rejection
Ancora responded strongly to the board’s decision, arguing that H.B. Fuller dismissed its proposal without engaging with the investment firm.
An Ancora spokesperson told Bloomberg that rejecting the offer without discussions was “irrational” and reinforced the CEO and board’s “proclivity for entrenchment.”
“Anybody with a pulse can infer from Ancora’ offer letter that the firm can self-finance, increase its offer and move quickly to address the company’s leverage crisis,” the spokesperson reportedly said in an emailed statement.
The comments suggest Ancora may have flexibility to increase its proposal should H.B. Fuller become willing to enter negotiations.
Ancora Says Sale Could Help Reduce H.B. Fuller Debt
Ancora approached H.B. Fuller’s board earlier this month with a letter calling for bilateral negotiations over the Building Adhesive Solutions unit, after initially raising the possibility with the company’s chief executive and chairman in July.
The investment firm argued that carving out the division could generate funds for H.B. Fuller to reduce debt while allowing management to devote greater attention to integrating Advanced Medical Solutions Group Plc.
Ancora also characterised Building Adhesive Solutions as a relatively low-margin operation competing within a highly fragmented market, arguing that a disposal could leave H.B. Fuller with a more focused portfolio.
Dispute Raises Pressure on H.B. Fuller Board
The disagreement could increase pressure on H.B. Fuller as investors assess whether selling the adhesives unit would improve the company’s financial position and strategic focus.
Ancora’s spokesperson also suggested that other parties are interested in both the Building Adhesive Solutions division and H.B. Fuller as a whole.
The spokesperson warned that if the board pursued discussions with other potential buyers rather than Ancora, it would “only make it easier to replace derelict directors.”
For NYSE:FUL investors, the unchanged pre-market share price suggests the market is taking a cautious approach to the dispute. Attention is likely to remain on whether Ancora returns with a higher proposal, H.B. Fuller reconsiders negotiations or interest from other potential buyers develops.
H B Fuller stock price
