London South East | The UK's favourite investor portal.

POORTIMING:

Your comment ar 21:02 yesterday says that the rate of business property relief from inheritance tax is 100%. This was the case until 5 April 2026, but with effect from 6 April 2026 the rate was reduced to 50%. You'll remember that this was one of the major changes to the inheritance tax regime which Rachel from Accounts announced in her first budget in Autumn 2024.

I remind everyone that for shares listed on AIM qualify for the relief:

(i) the AIM company must be a trading company rather than a business focused primarily on investment, dealing in securities, or letting property;

(ii) the deceased must have owned them for at least two years prior to death; and

(iii) the shares must still be held at the time of death.

I believe that there are two reason for the share price drop in the last four weeks or so from about 700:

- (1). Part of VLX's business is the manufacture of sophisticated power connections for data centres so it's regarded as a proxy for the AI infrastructure industry. This has meant that its share price has fallen in the last four weeks or so in tandem with the share prices of the big AI data centre operators and service providers listed on Nasdaq and/or the S&P500 and/or the Dow30 due to investors questioning whether their huge invesetment in infrastructure will pay off in the medium term and the long term

- (2). There is business property relief from inheritance tax ("IHT") at the rate of 50% on companies listed on AIM (provided that they are carrying on a trade which is not real estate investment, and they meet the qualifying criteria) which individuals hold at the time of their death. Accordingly, many individuals invest in AIM shares as part of their IHT mitigation planning. Also, there are many funds which invest in AIM shares on behalf of people who are their clients for the same reason. VLX shares will cease to be eligible for IHT relief when they leave AIM next month so it was expected that many people and funds iwho are invested in VLX for the relief would sell between 7 April 2026 when the move from AIM was announced and the day before the move which is expected at 8 am on 24 July 2026. (See also my comments here on 21 June.)

At the online investor presentation via the Investor Meet platform last Friday 26 June, either Nat Rothschild (the CEO) or Jon Boaden (the CFO) said that according to their research something like (If I remember correctly) 90% to 95% of investors intending to sell for IHT reasons had sold by then.

Many individuals will have originally invested in VLX because of IHT relief, but despite the loss of the relief surely many of them have decided to continue to hold on to their VLX shares or to sell only part of their holding so that they can continue to benefit from an almost inevitable increase in the share price over the next few years as a consequence of the growth of the business and its profits pursuant to the new forecast announced at the Capital Markets Event on 22 April 2026.

Bearing in mind how much VLX shares have gone up in the last three years, surely the "value" of IHT relief which is no longer available will be more than offset by the share price increase in the next few years. Accordingly, surely people who've sold VLX recently for IHT reasons should be taking advantage of the current depressed price by buying them back.

RECENT AMS SHARE PERFORMANCE ...

... has been much better than I expected, especially bearing in mind that during an "Offer Period" it's common for a target company's share price to fall in the absence of substantive news about any fomal offer. In the circumstances, Tuesday's rise of 13.5p was phenomenal. This is how AMS shares have performed since Thursday:

- Thursday 18 June: Just before the announcement of the two week extenstion to the put-up-or-shut-up ("PUSE") deadline, AMS was trading at 220.0 to 220.5. Within a minute of the announcement there was an immediate surge in transactions, particularly buys. There were a few buys at 224, 224.5 and 225, then it traded at about 222 until about 2:30 pm. After that, it started rising and closed up 1 at 228.

- Friday 19 June: Closed up 7 at 235.

- Monday 22 June: Closed down 2.5 at 231.5.

- Tuesday 23 June: Closed up 13.5 at 245; AMS was the biggest riser on AIM.

- Wednesday 25 June: Closed down 5 at 240.

Four large trades were reported after the close:

(1) 250,000 shares at 240p at 4:06 pm when it seems the spread was 239.5 to 240.5 so I can't say whether this was a sell or a buy.

(2) 300,000 shares at 240p at 4:09 pm when the spread was 239 to 239.5 or 239 to 240 so it's likely to have been a buy.

(3) 419,541 shares at 239.5p at 1:14 pm when it seems the spread was 239.5 to 240 so looks like it was a sale.

(4) Another trade involving 419,541 shares at 239.5p at 1:14 pm which also looks like a sale.

HB FULLER SECOND QUARTER RESULTS

As anticipated in my comment on 22 June HB Fuller, the possible bidder, reported their 2026 second quarter results to 30 May 2026 after the NYSE closed yesterday evening.

Adjusted EBITDA of $181 million (up 9% on last year), adjusted EBITDA margin of 19.1% (up 70 basis points year-on-year) and record second quarter operating cash flow ($121 million dollars, up about 10% year-on-year).

Net debt at the end of the second quarter of fiscal 2026 was $1,958 million, down $58 million year-on-year. Net debt-to-adjusted EBITDA was 3.1X, down from 3.4X at the end of the second quarter of fiscal 2025.

AMS supported the request to postpone the PUSU deadline. These good results improve HB Fuller's prospects of getting funding on favourable terms to finance an AMS takeover. Maybe this effect on funding was a factor in seeking the postponement of the PUSU until after today's results announcement. If so, it suggests that the AMS board supports a formal takeover bid at a price which has been agreed.

These results will help HB Fuller to resist the call from activist shareholder Ancora (who hold only about 2% of shares) to drop its pursuit of AMS and to conduct a full strategic review including the possibility of selling all or parts of its business.

The full results announcement is at:

https://newsroom.hbfuller.com/press-releases/press-release-details/2026/H-B--Fuller-Reports-Second-Quarter-202

IHT SELLERS / SHARE PRICE

IRONKNUT's comment here on Saturday 20 June 2026 says that share price has been drifting down and will continue to do so in the near future because of IHT investors selling up. I remind people that VLX shares will cease to benefit from relief from Inheritance Tax when it transfers from AIM to the main market, and it's often said that the reason why the share price of many companies making this transfer is because of sales by many people who invested to get the benefit of the relief.

I remind everyone that (see my comment here on 28 May):

- someone in the Investor Relations team at VLX told me that one object of the buy-back programme announced on 7th April was to support the share price if it gets depressed due to heavy selling by individual shareholders and IHT avoidance funds as a result of the loss of IHT relief; but

- since that announcement VLX shares had reached successive all-time highs so shares sold by private investors and IHT Funds were being absorbed easily without depressing the price therefore no shares had yet been bought under the buy-back programme.

Of course IHT relief only reduces the IHT payable by an estate on death. It doesn't afford any benefit during investors' lifetimes. Accordingly, won't many VLX investors be weighing up the loss of the IHT relief against the benefits of continuing to hold VLX? Surely many these "IHT relief" investors will be considering VLX's fundamentals and prospects. Indeed, within a little more than 5 weeks from the Capital Markets Event on 22 April when a very ambitious medium term plan for growth was announced, VLX rose more than 20% from 579 (22 April closing price) to 696 (28 May closing price) even though the company had confirmed on 7 April that the proposed move to the full market, which was annnounced on 25 March, will go ahead.

Since the end of May VLX shares have fallen. They were as low as 567 at the close on 10 June but since then there's been a decent recovery to 603 at the close on Friday 19 June. In the first 10 days of June sales outnumbered buys by a big margin, but according to the individual trades displayed on ADVFN, the number of large sales was lower last week so maybe the majority who wanted to get out due to the loss of IHT relief have now sold.

Moreover, maybe a lot of the selling since the end of May was profit-taking rather than being linked to forthcoming change in IHT status.

On the other hand, maybe there have been a lot of sales in the dark pool which as far as I'm aware aren't disclosed on ADVFN or on the London Stock Exchange's record of daily trades.

ANNUAL RESULTS

Further to my comment at 18:15 on 10 June:

- HB Fuller's put-up-or-shut-up deadline is 5 pm this coming Thursday 18 June.

- AMS's AGM is on the previous day, at 11:00 am tomorrow, Wednesday 17 June.

- If AMS have been able to agree takeover terms with HB Fuller which their board considers to be attractive enough to put to shareholders, perhaps there'll be an announcement of a formal offer tomorrow at about 7 am, before the markets open.

Don't forget that the Takeover Panel has the power to extend put-up-or-shut-up deadlnes. Extensions are often granted to give more time for due diligence to be completed, for prospective bidders to make their financial arrangements, or for prospective bidders and their targets to finalise the legal documents for a formal offer.

Does anyone have any idea about the outcome of the meeting last Wednesday 10 June between HB Fuller and its activist 2% shareholder Ancora?

It's clear from Ancora's letter to HB Fuller's board which is on their "SAVE H.B. FULLER" website https://www.savehbfuller.com/ that this meeting had been arranged well before HB Fuller's approach to AMS became public knowledge.

If Ancora want to be taken seriously and to try to get support from the largest HB Fuller shareholders, you'd have expected them to report promptly and publicly on the outcome of the meeting. However, they haven't provided an update on their "SAVE H.B. FULLER" website and, as far as I'm aware, they haven't made any other public announcement. If I were advising Ancora, I'd have told them to issue an announcement saying two things:

- (1) At the meeting they argued strongly that HB Fuller should abandon their interest in AMS.

- (2) HB Fuller told Ancora that due to the possible takeover, they're under legal restricitons which prevent them from saying anything about their approach to AMS.

HB Fuller's listing is on the New York Stock Exchange.

- On 21 May, when its approach to AMS was announced, its shares closed down 4.57% at $56.37.

- Since then they've recovered 14.28% to close at $64.42 yesterday.

- From Friday 5 June its shares have closed up every day apart from Wednesday 10 June.

This price recovery suggests that either (i) US investors don't expect HB Fuller to make a formal takeover offer for AMS or (ii) they do expect an offer but don't think that a takeover of AMS would be detrimental to HB Fuller or its shareholders in the short to medium term.

About 15 minutes ago HB Fuller were up 8 cents (0.12%) at $64.50.

Further to DoLittle's and Dartron's comments at 15:32 and 17:53 today, Ancora's campaign criticising HB Fuller's approach to take AMS over is very public - see https://www.savehbfuller.com/ so I guess they'll issue a statement very soon, ideally tomorrow, reporting on their meeting today with Celeste Mastin, HB Fuller's CEO, and/or other HB Fuller executives.

A few minutes ago I discovered that on 26 May 2026 HB Fuller reacted to Ancora's 23 May letter by issuing a press release about its value creation strategy. The press release is at:

- https://newsroom.hbfuller.com/press-releases/press-release-details/2026/H-B--Fuller-Issues-Statement-Regarding-Value-Creation-Strategy/default.aspx

This is most of what HB Fuller's press release says:

- "The H.B. Fuller management team is successfully executing on our stated strategy to reposition the business into a faster-growing and higher margin specialty adhesives player. Our team’s strong operational execution combined with a disciplined M&A strategy are how we will achieve our goals of greater than 20% adjusted EBITDA margins, low-teens ROIC and strong cash flow conversion.

H.B. Fuller has a demonstrated track record of thoughtful and disciplined M&A. We operate in a highly fragmented market, which enables us to prudently acquire assets that enhance our scale, accelerate our evolution to higher growth and position us to quickly de-lever post-acquisition.

Since the beginning of 2023, H.B. Fuller has successfully executed 13 acquisitions, which, collectively, have resulted in significant adjusted EBITDA growth and margin expansion through synergy capture, as outlined during our October 2025 Investor Day. For example, in the U.K. alone, we have acquired four businesses since 2022, representing $30 million of acquired adjusted EBITDA with approximately 13% adjusted EBITDA margins. Through delivery of synergies, we have collectively grown those businesses to more than $60 million in adjusted EBITDA with more than 23% adjusted EBITDA margins in three years.

We have pursued this M&A strategy while balancing other capital allocation priorities. To that end, we have been methodically deleveraging our balance sheet over the past several years, including reducing our net debt to adjusted EBITDA ratio to 3.1x at the end of the first quarter versus 3.5x in the same period last year.

H.B. Fuller remains open to assessing any and all paths to value creation and we are committed to both extremely disciplined M&A and deleveraging. Our recent disclosure regarding Advanced Medical Solutions Group plc (“AMS”) was required by the U.K. Takeover Code. We are engaged in discussions with AMS but there can be no certainty that a binding offer will be made. We will evaluate this transaction with the same rigor and care that we have applied to all of the other transactions that we have considered.

... H.B. Fuller ... [is] the largest pureplay adhesives company in the world ... "

Latest Share Chat

Member Info for BadNewInvestor

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)