Ancora threatens H.B. Fuller over AMS acquisition

The activist has threatened a proxy fight if the deal goes through.

Activist investor Ancora Holdings has threatened a proxy fight if adhesive maker H.B. Fuller attempts to acquire Advanced Medical Solutions Group (AMS).

The company submitted a GBP600 million ($808 million) unsolicited takeover proposal for AMS in late April.

AMS is a UK-based medical-products company that could help H.B. Fuller expand deeper into medical adhesives and wound-care markets, which it appears to view as faster-growing and potentially more resilient than some industrial end markets.

However, in a Tuesday letter, the 2% activist shareholder said it was concerned the deal would increase H.B. Fuller’s leverage to above 4.0x net debt to EBITDA despite management’s promises to pause dealmaking in favor of share repurchases and de-leveraging to around 2.5x to 3x net debt to EBITDA.

Ancora also said that investors have already endured total shareholder returns of negative 25% during the tenure of CEO Celeste Mastin, and that pursuing the deal would “exacerbate the negative overhand on [its] poor valuation multiple – further punishing shareholders.”

H.B. Fuller responded in a same-day letter, that the deal comes as part of its larger M&A strategy which saw the acquisition of 13 other companies since the beginning of 2023.

“We have pursued this M&A strategy while balancing other capital allocation priorities,” it said. “To that end, we have been methodically deleveraging our balance sheet over the past several years, including reducing our net debt to adjusted EBITDA ratio to 3.1x at the end of the first quarter versus 3.5x in the same period last year.

Ancora said it was prepared to “hold leadership accountable for any value-destructive and ill-timed capital allocation blunders” through a 2027 proxy fight if the company does not abandon the deal and instead explore broader strategic alternatives, including a potential sale of the company or certain assets.

H.B. Fuller’s stock closed at $61.94 on Wednesday, up 2.28% from the day before. The stock is up 3.79% year-to-date.

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