SEATTLE, Oct. 22, 2020 /PRNewswire/ -- 22NW, LP ("22NW" or
"we"), one of the largest stockholders of Huttig Building Products,
Inc. ("Huttig" or the "Company") (NASDAQ: HBP), with ownership of
approximately 7.9% of the Company's outstanding shares, today
issued a public letter to the Board of Directors of Huttig stating
22NW's belief that the proposed consideration of $4 per share offered by Mill Road Capital
Management LLC and its affiliates to acquire all outstanding shares
of the Company is far too low.
The full text of the letter follows:
October 22,
2020
Dear Board of Directors,
22NW, LP ("22NW", "our" or "we") is a significant stockholder of
Huttig Building Products, Inc. ("Huttig" or the "Company") with
beneficial ownership of over 2.1 million shares, representing
approximately 7.9% of the Company's outstanding shares. We note
that Mill Road Capital Management LLC and its affiliates
(collectively, "Mill Road") made an unsolicited offer of
$2.75 per share for Huttig in
August 2020, and increased the offer
to $4 per share in mid-October. We
believe that the price of Mill Road's unsolicited offer to acquire
the Company is grossly inadequate, and we urge the Company's Board
of Directors to reject this offer.
Huttig began the national expansion of its line of fasteners,
called "Huttig Grip," in 2017. Our diligence on Huttig has revealed
that while the Company had some initial logistical difficulties and
disruptions with the expansion of its fasteners business, a
majority of the problems had been resolved by 2019, and the Huttig
Grip brand was gaining significant traction prior to the COVID-19
pandemic. We believe that the Huttig Grip brand of fasteners will
continue to successfully expand, resulting in significant revenues
and EBITDA growth for the Company, but that COVID-19 has obscured
this progress and temporarily led to an unduly depressed share
price. In addition, we believe that low interest rates will fuel a
strong housing market for several years, as evidenced by the recent
record high level of the NAHB / Wells Fargo Housing Market
Index.1 Because of these factors, we believe that the
Company can achieve an EBITDA run rate of $32 million or better within the next three years
and a potential stock price of $9 per
share in a base case or $12 per share
in a bull case in that time frame.
We believe the $4 per share offer
proposed by Mill Road is unreasonably low and reflective of trough
EBITDA results, and we see no reason why the Company's stockholders
should give up potentially significant future upside by accepting
Mill Road's opportunistic bid for the Company.
Sincerely,
Aron English
President
22NW, LP
About 22NW, LP
22NW, LP is a Seattle-based
investment firm that specializes in small and microcap investments
that have multi-year investment horizons.
Contact:
Aron English
22NW, LP
(206) 227-3078
1
https://www.cnbc.com/2020/10/19/homebuilder-sentiment-sets-another-record-high-in-october.html
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content:http://www.prnewswire.com/news-releases/22nw-issues-letter-to-the-board-of-huttig-building-products-opposing-mill-roads-acquisition-proposal-301158419.html
SOURCE 22NW, LP