Voss backs strategic overview at Griffon. A possibility to construct worth could emerge – Information by Automobilnews.eu

Voss backs strategic overview at Griffon. A possibility to construct worth could emerge

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Firm: Griffon (GFF)

Enterprise: Griffon operates via two segments. Client and Skilled Merchandise (“CPP”) conducts its operations via AMES. Based in 1774, AMES is the main North American producer and a world supplier of branded shopper {and professional} instruments and merchandise for residence storage and group, landscaping and enhancing outside life. CPP sells merchandise globally via a portfolio of main manufacturers together with True Mood, AMES, and ClosetMaid. House and Constructing Merchandise (“HBP”) conducts its operations via Clopay. Based in 1964, Clopay is the biggest producer and marketer of storage doorways and rolling metal doorways in North America. Residential and business sectional storage doorways are bought via skilled sellers and main residence heart retail chains all through North America beneath the manufacturers Clopay, Preferrred and Holmes. Rolling metal door and grille merchandise designed for business, industrial, institutional, and retail use are bought beneath the CornellCookson model. The CPP enterprise has roughly $1.2 billion in annual income and $115 million in EBITDA, and the HBP enterprise has roughly $1 billion in annual income and $181 million in EBITDA.

Inventory Market Worth: $1.8B ($31.75 per share)

Activist: Voss Capital

Proportion Possession: 5.17%

Common Price: $25.91

Activist Commentary: Voss is a Houston-based hedge fund centered on underfollowed particular conditions. They aren’t conventional activists however have efficiently used activism as a software prior to now.

What’s Taking place?

On Aug. 15, Voss expressed its help for Griffon’s Might 2022 announcement that the board has initiated a overview of strategic alternate options, together with a attainable sale, merger, divestiture, recapitalization or different strategic transaction. Beforehand, on the firm’s annual assembly, Voss commenced a proxy struggle and efficiently gained a board seat for H.C. Charles Diao, considered one of Voss’s two director nominees.

Behind the Scenes

Voss first reported holding Griffon of their Q3 2021 13F submitting. On Nov. 23, 2021, previous to exceeding 5% possession, it nominated three administrators for election to the board and later diminished it slate to 2 administrators.

All through their proxy struggle, the agency launched letters and shows detailing its perception that Griffon has poor company governance and extreme govt compensation, and that the corporate ought to start a strategic overview. In a January 2022 presentation, it acknowledged that Griffon’s inventory could possibly be price $50/share (it is presently within the low $30’s) via the implementation of a plan that features (i) promoting the Protection Electronics enterprise, (ii) exploring alternate options for House and Constructing Merchandise, (iii) utilizing money to scale back debt and pay a particular dividend, (iv) right-sizing company overhead, and (v) bettering margins on the Client phase. Voss additionally criticized Griffon’s M&A technique, particularly highlighting its disapproval of the corporate’s acquisition of Hunter Fan for $845 million from MidOcean Companions. Finally, on the 2022 Annual Assembly, shareholders elected considered one of Voss’s director candidates, H.C. Charles Diao, to the board the place he presently serves as a director.

Quick ahead six months: Voss has now elevated their possession from 2.3% to five.2% in the present day. In its 13D submitting, the agency states that it’s “happy by the Issuer’s announcement in Might 2022 that the Board had initiated a course of to overview a complete vary of strategic alternate options to maximise shareholder worth together with a sale, merger, divestiture, recapitalization or different strategic transaction.” Voss then famous that it elevated its funding primarily based on its hope that the strategic overview will lead to a transaction that may unlock worth.

So, the arduous half is completed. Voss launched a proxy struggle, received a board seat and now it’s endorsing the corporate’s strategic overview. Since Griffon bought its Protection Electronics enterprise earlier this 12 months for $330 million, the strategic focus doubtless is focused on a possible sale of the House and Constructing Merchandise enterprise.

This isn’t the primary time Voss had a strategic thesis at a portfolio firm. Of their 13D on Benefytt Applied sciences filed in December 2019, they highlighted the strategic alternatives on the firm and the energetic M&A atmosphere in that house – Benefytt Applied sciences was acquired by Madison Dearborn Companions in August 2020. Additionally, in January 2020, Voss filed a 13D on Rosetta Stone with no Merchandise 4 language, however the firm was acquired by Cambium Studying on October 15, 2020.

There are a number of causes to count on that some strategic transaction is more likely to happen right here: (a) Voss’s presence within the boardroom, (b) the corporate already bought the Protection Electronics enterprise after Voss had advocated for that, and (c) the corporate’s announcement that they’re now pursuing an extra strategic overview. Furthermore, the following annual assembly of shareholders can be in February of 2023 and for the primary time the Griffon could have a majority of administrators (9 of 14) up for election as a result of they just lately began the method of declassifying the board. So, if the corporate isn’t attentive to Voss’s strategies, the agency might launch one other proxy struggle for majority management this time.

Ken Squire is the founder and president of 13D Monitor, an institutional analysis service on shareholder activism, and he’s the founder and portfolio supervisor of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Griffon is a holding within the fund. Squire can also be the creator of the AESG™ funding class, an activist funding fashion centered on bettering ESG practices of portfolio corporations.

Voss backs strategic overview at Griffon. A possibility to construct worth could emerge – Information by Automobilnews.eu


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