H.B. Fuller Sees $55M Synergy Potential From AMS Deal – But Investors Are Still Selling FUL Stock

• H.B. Fuller made a cash offer of £2.85 per share for Advanced Medical Solutions shareholders.
• The company expects about $55 million in combined run-rate revenue and cost synergies by 2031.
• AMS is also expected to increase H.B. Fuller’s annual revenue by roughly $300 million while creating revenue growth and EBITDA opportunities.

H.B. Fuller (FUL), the world’s largest pure-play adhesives maker, on Thursday said it would acquire UK-based Advanced Medical Solutions Group Plc in a cash deal valued at £715 million (about $941.8 million).

At the time of writing, FUL stock was down over 6% in Thursday's premarket trading.

Why H.B. Fuller Is Buying AMS

H.B. Fuller, the Minnesota-based adhesive maker, said the acquisition of Advanced Medical Solutions (AMS) would broaden its portfolio and add a medical adhesives segment to its overall product offerings.

“We have long been clear that medical is a core strategic growth market for H.B. Fuller given its durable demand trends, high regulatory-based entry barriers, and margin profile. Accordingly, we have thoroughly analyzed this structurally scarce market to identify the most attractive assets and growth opportunities,” said Celeste Mastin, President and Chief Executive Officer at H.B. Fuller.

Why Does The Deal Matter To FUL?

The company said that the deal would grow its capabilities across tissue bonding adhesives, tapes and dressings, and formulated bio-surgicals segments and result in bringing its total addressable market to $95 billion from $80 billion.

H.B. Fuller will also be able to leverage AMS’s pan-European salesforce and create cross-selling opportunities for its current portfolio, while AMS can utilize H.B. Fuller’s U.S. infrastructure and distribution network of market leaders to accelerate U.S. penetration.

The firm noted that it expects to capture about $55 million in combined run-rate revenue and cost synergies by 2031. AMS is also expected to increase H.B. Fuller’s annual revenue by roughly $300 million while creating revenue growth and earnings before interest, taxes , depreciation and amortization (EBITDA) opportunities.  

FUL - AMS Deal Contours

According to the proposed deal, each eligible AMS shareholder will get £2.85 per share in cash, implying a total enterprise value of £715 million. The transaction will be 100% financed through a committed financing, H.B. Fuller said.

The deal is expected to close by the end of this calendar year.

FUL Q2 Earnings Print

On Wednesday, H.B. Fuller reported second-quarter revenue of $950 million, ahead of analysts' expectations of $924 million, while adjusted earnings of $1.41 per share came in more than Wall Street estimates of $1.38, according to Fiscal.ai data.

What Retail Thinks Of FUL

On Stocktwits, retail sentiment surrounding the stock has remained ‘bullish’ amid ‘high’ message volumes in the past 24 hours.

FUL stock has gained over 7% so far this year.

(£1 = $1.32)

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