St. Louis based distributor Huttig Building Products has received an offer from its largest shareholder to acquire the company. Connecticut investment firm Mill Road Capital Management, which already owns 8.1% of Huttig’s shares, offered $2.75 per share for all of the remaining shares of Huttig Building Products. Mill Road Capital Management’s offer represented a premium of 67% over the company’s August 6 closing price of $1.65.
“Given our experience in the public markets, we recognize the inherent difficulties of creating value for shareholders as a public, micro-cap company,” Mill Road Capital Management wrote in an open letter to Huttig chairman of the board of directors Delbert Tanner. “There is very little sell-side analyst coverage and minimal demand for micro-cap stocks. Institutional investors avoid stocks like Huttig; it is difficult to accumulate a position and any attempt to sell large blocks can materially depress the share price for months. As a result, microcaps often attract short-term shareholders who look for “quick wins” and actively dissuade management from making sensible investments in long-term value-creation. We hope that the Board of Directors finds this proposal compelling for the Company’s shareholders and we look forward to working with you in connection with a transaction.”
Huttig Building Products is a domestic distributor of millwork, building materials and wood products used in residential construction and in-home improvement, remodeling, and repair work. The company distributes its products through 27 distribution centers serving 41 states. For the 2019 fiscal year, Huttig reported a net loss of $21.3 million and net sales of $812 million.