Key facts
- Activist investor Ancora Alternatives has acquired a significant stake in Ashland.
- Ancora is urging Ashland to pursue a sale, projecting a potential 30% stock price increase.
- The hedge fund is ready to initiate a proxy fight if no deal progress is made by September.
- Ashland's stock has declined roughly 50% from its December 2022 high.
- Standard Industries is Ashland's largest investor with a nearly 10% stake.
Activist investor Ancora Alternatives has acquired a significant stake in U.S. specialty chemicals company Ashland and is urging the company to pursue a sale, believing such a transaction could boost its share price by at least 30%. Ancora stated that if tangible progress toward a deal is not achieved by the time director nomination windows open in September, it is prepared to launch a proxy fight.
Ancora began accumulating its stake in April after Ashland reported disappointing fiscal second-quarter earnings, which led to a significant drop in its stock price. Since reaching a high in December 2022, Ashland's stock has fallen approximately 50% and is currently trading near $57.50, with a market value of $2.7 billion. Ancora forecasts that a sale process could drive the stock price to at least $76 per share, representing a 31% gain from its current level.
In its presentation, Ancora argued that a sale is the optimal path to realizing Ashland's intrinsic value, given the company's significant trading discount and near-term growth and execution challenges. The hedge fund believes Ashland is an attractive asset for both strategic buyers and financial sponsors.
Standard Industries, a privately held global industrial conglomerate, is Ashland's largest investor with a stake of nearly 10%. Analysts have speculated that Standard Industries could be a potential buyer, given its prior acquisition experience, including the purchase of chemical giant W.R. Grace in 2021.
Ancora, which has a track record of over two dozen activist campaigns, is unveiling its Ashland campaign at the Wolfe Research Activist Conference. The firm highlighted that the current environment of increased mergers and acquisitions activity has emboldened activist investors to push for sales. While acknowledging Ashland's product strengths and customer base, Ancora signaled its readiness to increase pressure, suggesting that fresh leadership might be necessary if constructive dialogue with the board and management does not yield a resolution.
Ancora attributed some of Ashland's underperformance to CEO Guillermo Novo, who was appointed in 2019 with a mandate to transform the company. Despite some improvements, the stock price has declined 24% during Novo's tenure. While not explicitly calling for Novo's removal, Ancora indicated that management's time to deliver stronger results is running out.