Adhesives maker H.B. Fuller said on August 24 that it had rejected an unsolicited bid from shareholder Ancora of up to $1.2 billion for its Building Adhesives Solutions business.
Why the offer may be hard to make work
It's on shaky ground. Fuller's share price has tumbled 8% over the past year while the Dow Jones U.S. Specialty Chemicals Index .DJUSCX gained nearly 12%. The performance tracks closer to diversified peers Henkel HNKG.DE and Avery Dennison AVY.N, but the duo is also valued at more than under-8 times expected 2026 EBITDA a premium to where investors rate Fuller, according to Visible Alpha.
Although 40% of the 184 first-half activist campaigns logged by investment bank Lazard are M&A-focused, finding an acquirer for Fuller might be tough. Private equity firms are choking on $4 trillion of unsold companies, while borrowing from embattled private credit shops might be harder. In the second quarter, buyout activity fell to $145 billion, consultancy Bain estimates, the lowest level since rising interest rates started crushing activity in 2022.
In that context, Ancora’s redoubled efforts make sense. Although rare, activist bids aren't unprecedented. Elliott Management bought bookseller Barnes & Noble, among others, while Irenic Capital Management partnered with Apollo Global Management APO.N to acquire manufacturer Arconic. Moving things along is important for Ancora, too, before Fuller starts touting more explicitly any benefits from its proposed acquisition.
Price will be the problem for suitors. The top line at Fuller's buildings division is growing 7%, faster than the company's overall rate, and boss Celeste Mastin contends that it can ride the data center boom. The activist offer may not gel this time, but the tactic will probably stick.
Activist campaign meets a difficult market
Aggressive investors find themselves in a sticky situation. They're busier than ever, increasingly urging targets to pursue M&A, but at a time when private equity buyers are enduring a pronounced slowdown. Ancora's unusual campaign at adhesives maker H.B. Fuller FUL.N is one way to try and ungum the problem.
James Chadwick, who runs Ancora's alternatives division, is well-practiced in the dark arts of activism. The firm recently pushed media conglomerate Warner Bros Discovery WBD.O to choose Paramount Skydance's PSKY.O offer over one from Netflix NFLX.O and helped steer a deal at industrial equipment vendor Ritchie Bros. It disclosed its presence at Fuller in May, imploring the company to abandon a £715 million, or $975 million, bid for Advanced Medical Solutions AMSU.L.
Unable to derail the transaction, however, Ancora instead offered to buy Fuller's Building Adhesives Solutions business for $1.2 billion. It presents the plan as a way for the company to reduce debt and open the door to buyout shops. Fuller rejected the entreaty on Monday.
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