H.B. Fuller Rejects Ancora’s Up to $1.2B BAS Proposal
Image courtesy of H.B. Fuller.
Need to Know
- H.B. Fuller’s board unanimously rejected Ancora’s unsolicited, nonbinding proposal to acquire Building Adhesive Solutions for $1.1 billion to $1.2 billion.
- TThe company said the offer undervalues BAS and does not account for the segment’s growth and earnings potential.
- H.B. Fuller said separating BAS would affect shared manufacturing operations at more than 30 plants worldwide.
H.B. Fuller Co.’s board of directors has unanimously rejected Ancora Holdings Group’s unsolicited, nonbinding proposal to acquire the company’s Building Adhesive Solutions business for between $1.1 billion and $1.2 billion.
The decision follows Ancora’s Aug. 12 proposal to acquire the BAS segment. H.B. Fuller said its board evaluated the offer with assistance from independent financial and legal advisers.
The board concluded that the proposed value was below comparable transactions and did not represent the full value of the business. It also said the offer did not adequately account for BAS growth prospects or provide sufficient details about Ancora’s financing and ability to operate the business independently.
H.B. Fuller reported that BAS generated 6% organic growth during the second quarter, supported by higher pricing and volume, while EBITDA improved 10%. The company expects recovery in construction markets and continued data-center development to support future earnings growth in the segment.
The board also pointed to Project Quantum Leap, H.B. Fuller’s restructuring and footprint-optimization program, as a source of additional earnings potential for BAS.
Separating the segment would create operating inefficiencies, according to H.B. Fuller, because BAS shares manufacturing operations with other company businesses at more than 30 plants worldwide. The board said tax effects and other separation costs could offset much of the benefit of using sale proceeds to reduce debt.
H.B. Fuller said it remains confident that cash generation and other available measures will allow the company to return net leverage to its target range of 2.5 to 3.0 times within two years after completing its acquisition of Advanced Medical Solutions Group plc.
The company said its current priorities are closing and integrating the AMS acquisition, advancing Project Quantum Leap and pursuing commercial and manufacturing improvements intended to increase adjusted EBITDA margin above 20%.
The proposed carve-out is relevant to PCI’s adhesives and sealants coverage because BAS shares manufacturing operations with H.B. Fuller’s broader portfolio, making both valuation and operational separation important to CASE industry readers.
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!
