Ancora pushes Ashland to pursue sale as activist stake raises takeover pressure

Traders Union
All News
Financial News
Ancora pushes Ashland sale

Highlights

Ancora Alternatives has built a significant stake in Ashland and is pushing for a sale that could lift the stock from $57.50 to at least $76 per share, implying a 31% upside.
Ashland's market value stands at about $2.7 billion after disappointing Q2 results and a 50% drop in shares since December 2022, amplifying takeover pressure.
Ancora threatens a proxy fight if there is no sale progress by September and reveals its campaign as M&A activity rises, citing execution issues under CEO Guillermo Novo.

Activist campaign targets sale process

As first reported by Reuters, Ancora Alternatives has built a significant stake in Ashland and is urging the company to sell itself, based on a presentation reviewed by the news organization. The Cleveland-based hedge fund argues that Ashland's market valuation materially undervalues its individual business segments and says a transaction could lift the stock to at least $76 per share, from around $57.50, implying a gain of about 31%.

Ancora began building its position after Ashland shares fell in April, when the company reported disappointing fiscal second-quarter results. Net income declined and earnings per share missed Wall Street expectations, adding to a longer slide that has left the stock down roughly 50% from its December 2022 high and valuing the company at about $2.7 billion.

The investor says it is prepared to launch a proxy fight if there is no tangible progress toward a deal by the time Ashland's director nomination window opens in September. In its presentation, Ancora says a sale is the best route to unlock intrinsic value, pointing to what it describes as a significant trading discount, near-term growth issues and execution problems.

Board pressure grows as buyers are weighed

Ashland, based in Wilmington, Delaware, sells specialty chemicals to customers including L'Oreal, Estee Lauder and Pfizer. Ancora says public pressure from its campaign could help draw out potential acquirers by giving interested strategic buyers and financial sponsors cover to come forward, while also pushing management and the board to act more decisively.

Standard Industries, a privately held industrial conglomerate, is currently Ashland's largest investor with a stake of nearly 10%. Industry analysts have speculated it could be among possible buyers, particularly after its 2021 acquisition of chemical company W.R. Grace, though a representative for Standard Investments declined to comment and Ashland did not immediately provide comment.

Ancora is presenting its Ashland campaign at the Wolfe Research Activist Conference on Tuesday, as a broader pickup in mergers and acquisitions this year encourages activist investors to press companies to consider sales. The hedge fund, which has run more than two dozen campaigns in the past six years, also signals it is ready to seek board changes if talks do not produce a near-term outcome, and it links some of Ashland's weak performance to CEO Guillermo Novo's tenure since 2019.

Our earlier coverage of Boots’ potential $10bn sale outlined how Sycamore Partners, after taking control of Walgreens Boots Alliance and splitting it into standalone units, began exploring a sale of Boots instead of pursuing a London IPO. We noted that improving UK sales and profit growth helped revive buyer interest, with strategic bidders such as the Weston family and Sigma Healthcare reported to be weighing a deal.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.