Ancora Holdings Group, the activist investor that spent months trying to block the company's big medical acquisition, is now offering to buy a piece of the business itself. The offer is not new. Ancora first pitched the idea in early July to the CEO and chairman, but got no response.
Now the Cleveland-based firm is going public with the bid and turning up the heat. H.B. Fuller, based in St. Paul, Minnesota, is a specialty chemical company that operates several adhesive-related segments. The Building Adhesive Solutions unit serves construction and renovation markets, but its margins have trailed other parts of the business.
Meanwhile, the company's purchase of Advanced Medical Solutions Group Plc in June was meant to shift its focus toward higher-growth medical products, but it also added significant debt, making the potential cash infusion from a divestiture more attractive.
Ancora's argument is simple: selling the adhesives unit would let H.B. Fuller pay down debt, focus on integrating Advanced Medical Solutions Group Plc, the UK medical products company it bought in June, and walk away from a low-margin business in a crowded market.
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The firm also sees a bigger win. In the new letter, executives Fredrick DiSanto and James Chadwick accused the board of letting a "preference for entrenchment" cloud their judgment and hurt shareholders. "We felt like at this point in time, they are not going to move on what we think are the biggest issues facing the company [so] we had to apply more pressure," Chadwick said.
There is a personal edge here too. Ancora has a history with this board. The letter references "running a multi-year campaign to remove and replace several of you due to chronic underperformance." For Ancora, this bid is both a business opportunity and a way to end the standoff for good.
Ancora says it is confident it can line up financing, and the deal would have no financing contingency. It would still need due diligence and regulatory approvals, but the firm is pushing for a direct bilateral sale rather than an auction. "There's going to be a lot of parties interested in this business," Chadwick said, arguing the unit is a unique asset inside a company that acts like a conglomerate of adhesives businesses.
Despite the drop, shares are still up about 10% over the past year. Ancora is not new to this kind of pressure. The company oversees $11.7 billion in assets and has been instrumental in transactions such as those for United States Steel and Norfolk Southern.
It also recently settled with Ashland Inc. last month, and Ashland is now exploring a possible sale. Chadwick said Ancora would prefer to work with H.B. Fuller privately, but the firm may rethink its approach if nothing changes by year-end. For investors, the message is clear: this is not going away quietly.
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