Mill Road Capital is pleased to announce that it sent the following letter to the Board of Directors of Huttig Building Products, Inc. (NASDAQ GS: HBP) on August 6, 2020.
August 6, 2020
Chairman of the Board of Directors
Huttig Building Products, Inc.
555 Maryville University Drive, Suite 400
St. Louis, MO 63141
Re: Acquisition Proposal for Huttig Building Products, Inc.
Dear Mr. Tanner:
Mill Road Capital Management LLC and its affiliated funds (“Mill Road”) are pleased to present this proposal for the acquisition of Huttig Building Products, Inc. (“Huttig” or the “Company”). As you know, Mill Road is one of the largest shareholders of Huttig with ownership of 8.1% of the Company‘s outstanding shares. Since making our initial investment in Huttig in 2017, we have developed a deep appreciation of the Company and its CEO, Jon Vrabely.
Given our experience in the public markets, we recognize the inherent difficulties of creating value for shareholders as a public, micro-cap company. 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.
Based on our review of publicly available information to date, Mill Road proposes to acquire 100% of the outstanding shares of the Company not already owned by Mill Road for $2.75 per share which represents a premium of 67% over today’s closing price. The purchase price would be payable in cash.
Due Diligence and Timing
Given our familiarity with the Company and significant experience executing going-private transactions, we believe we can complete customary business, accounting, and legal due diligence and negotiate definitive documentation within 60 days.
Mill Road anticipates the proposed transaction will be funded through a combination of third party debt in addition to equity capital provided by Mill Road. We have ample equity capital to complete the transaction and are highly confident in our ability to raise an appropriate amount of debt financing.
Obligations and Approvals
This proposal is not legally binding. Binding legal obligations of Mill Road and the Company will be created only through execution and delivery of definitive agreements. Mill Road does not require any outside approvals to complete a transaction (other than such approvals and/or expirations of waiting periods as may be required under applicable antitrust or other laws).
Overview of Mill Road
Mill Road is a private investment firm which has raised approximately $900 million in aggregate committed equity capital. Our limited partners include a prominent and highly respected group of state pension funds, foundations, endowments and insurance companies. Our team is comprised of a core group of former Blackstone professionals who have successfully completed several dozen control transactions with a cumulative transaction value of several billion dollars.
If you have any questions, please feel free to contact me directly at (203) 987-3505. I look forward to discussing at your earliest convenience.
Mill Road Capital Management LLC
Justin C. Jacobs
Management Committee Director
About Mill Road Capital
Mill Road Capital is a private investment firm focused on investing in and partnering with publicly traded micro-cap companies in the U.S. and Canada. The firm has flexible, long-term capital with the ability to purchase shares in the open market, buy large block positions from existing shareholders, provide capital for growth or acquisition opportunities, or execute going-private transactions. The firm has raised approximately $900 million of aggregate equity capital commitments and has offices in Greenwich, CT and the San Francisco Bay Area. More information can be found at http://www.millroadcapital.com.
This communication is not an offer to purchase or a solicitation of an offer to sell any securities. This communication relates to an acquisition proposal which Mill Road Capital Management LLC (“Mill Road Capital”) has made to acquire Huttig Building Products, Inc. (“Huttig”). Any such transaction would only be made through documents filed with the U.S. Securities and Exchange Commission (“SEC”). No assurance can be given that any such transaction will occur. If such transaction proceeds and such documents are filed with the SEC, Huttig stockholders are urged to read such documents carefully in their entirety if and when they become available, as they will contain important information about the proposed transaction. Huttig stockholders would be able to obtain such documents (when available) free of charge at the SEC's web site, www.sec.gov or from Mill Road Capital at www.millroadcapital.com or at Mill Road Capital Management LLC, 382 Greenwich Avenue, Greenwich, Connecticut 06830.
Justin Jacobs, (203) 987-3505