LONDON, June 20, 2023 /PRNewswire/ -- Ancora Alternatives
LLC (together with its affiliates, "Ancora" or "we"), the third
largest shareholder of Avon Protection PLC (LSE: AVON) ("AVON"
or the "Company"), owning approximately 5.1% of the Company's
outstanding stock, has today issued the following letter to the
Company's Board of Directors to urge an immediate review of
strategic alternatives:
June 20, 2023
Avon Protection PLC
Hampton Park West
Semington Road
Melksham Wiltshire
SN12 6NB
The Board of Directors of Avon Protection PLC,
Letter to urge an immediate review of strategic
alternatives
- 70% decline in share price in three years
- Significant loss of shareholder value and
long-term underperformance
- Urgent action critical to protect against uncertain future of
the business
- Review of strategic options recommended
Ancora Alternatives LLC (together with its affiliates, "Ancora"
or "we") is the third largest shareholder of Avon Protection PLC
(LSE: AVON) ("AVON" or the "Company"), owning approximately
5.1% of the Company's outstanding stock. Ancora has a long and
successful track record of creating value for its portfolio
companies through a hands-on investing approach, with the ultimate
goal of creating value for the benefit of all stockholders.
Significant loss of shareholder value and continued
underperformance
We originally invested in AVON
because of the Company's range of market-leading products in
respiratory and head protection – vital equipment that protects
military and first responder personnel – as well as the robust
industry tailwinds for these types of products. We consider
AVON's strong relationships with
the US Department of Defense ("DoD"), the NATO Support and
Procurement Agency ("NSPA"), and the global first responder
agencies give the Company a substantial competitive advantage.
However, despite AVON's strong
market position, enviable product suite and world class customer
roster, the Company has lost more than 70% of its equity value
over the last 36 months.
AVON has also significantly
underperformed the FTSE 250 along with its Aerospace and
Defense peers over the same period, as shown in the Total
Shareholder Returns table below:
AVON Total
Shareholder Return (TSR)
|
AVON
vs.
|
YTD
|
1
Year
|
2
Year
|
3
Year
|
FTSE
250
|
-16.9 %
|
-6.1 %
|
-49.4 %
|
-78.2 %
|
A&D Peer
Avg.(1)
|
-21.7 %
|
-22.0 %
|
-71.0 %
|
-113.8 %
|
Source: FactSet as
of 6/16/ 2023
|
Insufficient urgency taken by the Board to address
AVON's underperformance
Since becoming a shareholder in AVON, Ancora has engaged in a private dialogue
with AVON's Board of Directors
(the "Board"), as well as holding multiple meetings with Board
Chair Bruce Thompson, to discuss
AVON's underperformance, business
strategy, historical missteps, executive leadership, governance,
and potential avenues to maximize value.
We have intentionally kept our communications private in an
effort to maintain a constructive relationship with the Board while
AVON's executive leadership
transition unfolded.
However, due to the Board's clear failure to date to address
our concerns over the future of the Company and the material risks
(operational and execution) it faces, we have concluded that we
have no alternative other than to express our views
publicly.
The Company's half-year earnings, published 23 May 2023, have only heightened our trepidation
that AVON's business model is no
longer suitable for a standalone public entity. The results merely
served to validate our conviction that AVON would be better positioned for long-term
success as part of a larger organization that can capitalize on
AVON's market-leading positions in
the respiratory and head protection industries.
We acknowledge CEO Jos Sclater has started to lay the groundwork
to improve accountability, revenue growth, margins, and free cash
flow since his appointment to the role, but we estimate there are
still meaningful execution risks that could impede value creation
as AVON's business is restructured
over the next several years. Considering the path to restoring
AVON's credibility and public
market valuation is long, arduous, and fraught with risk, we
believe urgent action is required to secure value for
shareholders.
Review of strategic options recommended to secure future of
the business
In conclusion, we believe the Board should immediately commence
a full and fair strategic alternatives review to maximize
value and, critically, prevent further losses for shareholders,
which have been significant already. The outcome of this review
should be considered, on a risk-adjusted basis, alongside the
Board's turnaround plan.
We believe there would be multiple potential strategic acquirers
for AVON who would be willing to
pay a meaningful premium to the current share price while also
presenting a compelling transaction structure that would allow
AVON's shareholders to participate
if a combination were to be consummated.
Summary and next steps – urgent action advised
As long-term shareholders, we are highly concerned with the
sheer magnitude of value destruction that has unfolded under the
incumbent Board's stewardship. We believe that the Board, as a
matter of urgency, should retain a leading investment bank to
commence a review of strategic alternatives in order to maximize
shareholder value.
We look forward to your engagement on these matters and your
commencement of the necessary course of action.
Sincerely,
Frederick DiSanto
James M. Chadwick
Chief Executive Officer and Executive Chairman
President and Portfolio
Manager
Ancora Holdings Group,
LLC
Ancora Alternatives
LLC
Ancora is publishing this letter solely for the information of
other shareholders in AVON. This
letter is not an offer to, or solicitation of, any potential
clients or investors for the provision by Ancora of investment
management, advisory or any other comparable or related services.
This letter is provided merely for general informational purposes
and is not intended to be, nor should it be construed as (i)
investment, financial, tax or legal advice, or (ii) a
recommendation to buy, sell or hold any security or other
investment, or to pursue any investment style or strategy. Neither
the information nor any opinion contained in this letter
constitutes an inducement or offer to purchase or sell or a
solicitation of an offer to purchase or sell any securities or
other investments in AVON or any
other company or an offer to arrange any transaction, or to enter
into legal relations.
No representation is made as to the accuracy or completeness of
any information contained herein, and the recipient accepts all
risk in relying on this information for any purpose whatsoever.
Without prejudice to the foregoing, any views expressed herein are
the opinions of Ancora as of the date on which this letter has been
prepared and are subject to change at any time without notice.
Ancora does not undertake to update this information. Any
forward-looking statements herein are inherently subject to
material business, economic and competitive risks and uncertainties
which are beyond Ancora's control. In addition, these
forward-looking statements are subject to assumptions with respect
to future business strategies and decisions that are subject to
change. Nothing in this letter should be relied upon as a promise
or representation as to the future.
About Ancora
Ancora Alternatives LLC is the alternative asset management RIA
of Ancora Holdings Group, LLC. Founded in 2003, Ancora Holdings
Group, LLC offers integrated investment advisory, wealth management
and retirement plan services to individuals and institutions across
the United States. The firm's
comprehensive service offering is complemented by a dedicated team
that has the breadth of expertise and operational structure of a
global institution, with the responsiveness and flexibility of a
boutique firm. For more information about Ancora, please visit
https://ancora.net.
Enquiries
Greenbrook
Matthew Goodman / Sofia Newitt
+44 (0)207 952 2000
ancora@greenbrookadvisory.com
1 Aerospace and Defense Peers include: CDRE, MSA,
BOS-CA, AJRD, AVAV, BAB-LON, BA-LON, BWXT, CHG-LON, CW, DCO, GD,
HEI, HXL, HWM, HII, KTOS, LHX, LDOS, LMT, MRCY, MOG.A, NOC, PSN,
RADA, RTX, TXT, TDG, TGI
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