Activist Ancora Comes Back With Bigger Bid For H.B. Fuller Unit

Ancora Holdings Group on Tuesday raised its offer to acquire H.B. Fuller Co.’s (NYSE:FUL) Building Adhesive Solutions business to between $1.2 billion and $1.4 billion in cash.The activist investor said the revised proposal is backed by a “highly confident” financing letter from Fortress Investment Group.Ancora Raises Its OfferAncora’s latest bid increases its previous $1.1 billion to $1.2 billion proposal submitted in August. H.B. Fuller rejected that offer on Aug. 24, saying it materially undervalued the business.Ancora said the new proposal represents about 50% of H.B. Fuller’s current equity value. However, the Building Adhesive Solutions, or BAS, unit accounts for roughly 20% of consolidated revenue.The investor said its offer values BAS at 8.5 times to 9.9 times last-12-month EBITDA. It also values the unit at about nine times estimated 2026 EBITDA, compared with roughly seven times for H.B. Fuller overall, citing Visible Alpha estimates.Ancora Targets Debt ReductionAncora argued that selling BAS could help H.B. Fuller reduce leverage and balance-sheet risk. It estimated the company’s leverage at roughly four times and pointed to its exposure to variable-rate debt.The firm also disputed H.B. Fuller’s concerns about costs and operational challenges tied to separating BAS.Ancora said Fortress’ financing support strengthens the revised proposal. It added that it would not expect a final transaction agreement to include a financing contingency.The proposal remains subject to due diligence, regulatory and other required approvals, as well as negotiation of definitive agreements.Ancora asked H.B. Fuller’s independent directors to engage directly on the offer. It said it remains open to increasing the price if due diligence reveals additional value in the BAS business.The proposal is nonbinding and can be modified or withdrawn before a definitive agreement is signed. See More: Top Value Stocks Management Signals Valuation Could Shift The EquationH.B. Fuller management recently indicated that valuation could determine whether the challenges of separating BAS are worth overcoming.On the company’s third-quarter earnings call, CFO John Corkrean said BAS shares 25 to 30 manufacturing plants with other divisions. The unit also accounts for 35% to 40% of corporate solvent purchases despite generating only about 20% of revenue.Management said those procurement and operating dis-synergies are significant. However, Corkrean added they could be overcome “depending on the potential valuation of a sale of an asset.”H.B. Fuller Opens Door To DivestituresThe increased offer follows comments from H.B. Fuller management during its recent third-quarter earnings call that suggested greater openness to portfolio changes.CEO Celeste Mastin said deleveraging would be a “very, very high priority” after the company closes its Advanced Medical Solutions acquisition. She said H.B. Fuller is applying greater scrutiny to its portfolio and examining whether it remains the best owner of each market segment.Mastin said potential divestitures are being taken “very seriously” because they could accelerate debt reduction.However, management has argued that BAS is deeply integrated with H.B. Fuller. The unit operates across roughly 25 to 30 manufacturing facilities, with about two-thirds shared with other businesses.CFO John Corkrean also cited stranded costs and reduced purchasing power as potential drawbacks of a sale. Still, he said those issues could be overcome depending on the valuation offered.FUL Price Action: H.B. Fuller shares were up 0.47% at $49.60 at the time of publication on Tuesday, according to Benzinga Pro data.Image via Shutterstock Read Also: Ancora’s $1.2 Billion Cash Bid Pressures H.B. Fuller to Rethink Its Debt Strategy