Ancora Holdings Group LLC (together with its affiliates, “Ancora”), a meaningful shareholder of H.B. Fuller Company (NYSE: FUL) (“H.B. Fuller” or the “Company”), today reaffirmed its proposal to acquire the Company’s Building Adhesive Solutions (“BAS”) segment following H.B. Fuller’s Board of Directors’ (the “Board”) baseless rejection of the offer and issued the following statement:
“First and foremost, Ancora reaffirms the offer that it recently submitted, as it is a win for H.B. Fuller, the Company’s shareholders and us.
All shareholders of H.B. Fuller should be deeply disappointed with the Board’s decision to irrationally reject a highly-credible proposal to acquire the Company’s BAS segment without any outreach to us. We only learned of the Board’s illogical rejection from Bloomberg News when a request for comment came through on an evidently ‘placed’ story. Board Chair Teresa Rasmussen’s subsequently received rejection letter – which appears to be clearly ghostwritten by legal and financial advisors tasked with defending the status quo – is just further evidence of entrenchment considering that she and her fellow directors consciously decided to forgo any engagement with us.
Given that H.B. Fuller has delivered negative total shareholder returns over every relevant period and produced sustained underperformance throughout its CEO’s tenure, we are baffled by the Board’s decision to summarily dismiss a viable offer that clearly states our ability to take steps that include:
- Increasing the contemplated offer if due diligence demonstrates a higher offer is warranted;
- Completing the acquisition without a financing contingency; and
- Helping the Company move quickly to address its leverage crisis, which has been exacerbated by the extremely poor cash flow conversion that can be reviewed in disclosed financials.
The reality is that the Board’s reliance on H.B. Fuller’s cash flow generation to rapidly reduce leverage is simply not credible given the Company’s poor free cash flow conversion, including an abysmal five-year average free cash flow conversion rate of 28.1%. We believe asset sales represent the most viable path for the Company to deleverage within a reasonable timeframe. Rather than taking prudent steps to reduce leverage, the Board continues to swing for the fences while entrenching itself along the way. Should the Board’s decisions ultimately result in continued harm to shareholders, we believe it should be held liable and Ancora will not hesitate to pursue all available legal remedies.
In closing, we fear the Board is receiving flawed perspectives from CEO Celeste Mastin and “yes-men” advisors. Although we are somewhat surprised to see H.B. Fuller act in such a hasty manner, it is all the more shocking to see Ms. Mastin and Ms. Rasmussen coax the full Board – including a director from storied investment firm Continental Grain – into illogical decisions that undermine shareholders’ interests. If the Board wants to avoid a prolonged public campaign for change, it needs to either install capable leadership or initiate a credible review of strategic alternatives – there is no third path.”
About Ancora
Founded in 2003, Ancora Holdings Group, LLC offers integrated investment advisory, wealth management, retirement plan services and insurance solutions to individuals and institutions across the United States. The firm is a long-term supporter of union labor and has a history of working with union groups and public pension plans to deliver long-term value. Ancora’s comprehensive service offering is complemented by a dedicated team that has the breadth of expertise and operational structure of a global institution, with the responsiveness and flexibility of a boutique firm. Ancora Alternatives is the alternative asset management division of Ancora Holdings Group, investing across three primary strategies: activism, multi-strategy and commodities. For more information about Ancora Alternatives, please visit www.ancoraalts.com.
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