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BROOMFIELD, Colo. - DMC Global Inc. (NASDAQ:BOOM), a diversified manufacturing firm, has turned down a non-binding takeover proposal from Steel Connect, which sought to purchase all outstanding common stock not already owned by Steel Connect for $10.18 per share. With the stock currently trading at $8.39, the offer represented a 21% premium. The board of DMC, after consulting with legal and financial advisors, concluded that the offer undervalues the company and its prospective future value. According to InvestingPro analysis, DMC Global maintains a GOOD financial health score, suggesting the board’s confidence may be well-founded.
The board’s decision was influenced by several factors, including the potential undervaluation of Arcadia’s long-term value creation potential, especially given its role in rebuilding efforts after Southern California wildfires. With a current ratio of 2.37, DMC Global’s strong liquidity position supports its operational capabilities. Arcadia has recently refocused its core commercial operations under the leadership of its returning former president, Jim Schladen.
Additionally, the board believes that the proposal does not account for the cyclical improvements at DynaEnergetics, a leading supplier of well-perforating systems. DynaEnergetics has recently automated its North American manufacturing center and completed a value engineering initiative for its DynaStage system, which is expected to bring cost benefits in the first half of 2025.
The board also expressed concerns about Steel Connect’s attempts to advance its interests, citing a proposed investment in DMC that could lead to Steel Connect gaining effective control without paying a premium and diluting existing stockholders’ shares. Instead, DMC has negotiated an extension of its obligations under the Arcadia joint venture until September 6, 2026.
DMC is currently stabilizing its business, exceeding its fourth-quarter sales and adjusted EBITDA guidance, and is in the process of recruiting a new CEO. The board emphasized that the proposal would deprive DMC stockholders of the benefits of recent initiatives that are due to them.
Steel Connect has had significant access to conduct due diligence on DMC, and according to DMC, Steel Connect’s claims to the contrary are factually inaccurate. DMC stockholders are advised that no action is required from them at this time.
DMC Global operates businesses that provide engineered products and solutions with leadership positions in their markets. The company is involved in sectors ranging from architectural building products to the energy industry and industrial infrastructure. With annual revenue of $664.51M and EBITDA of $64.12M, the company maintains a significant market presence. For deeper insights into DMC Global’s valuation and financial metrics, investors can access comprehensive analysis through InvestingPro, which offers detailed Pro Research Reports covering over 1,400 US stocks.
This news is based on a press release statement from DMC Global Inc. and contains forward-looking statements that are subject to risks and uncertainties. Investors and media are advised to consider these factors and refer to the company’s regulatory filings for further information.
In other recent news, DMC Global recently received a non-binding acquisition proposal from Steel Connect, offering to purchase all outstanding shares of DMC Global at $10.18 per share in cash. The company’s board of directors is currently reviewing the proposal with the assistance of BofA Securities and legal advisors Womble Bond Dickinson (US) LLP and Richards, Layton & Finger, P.A.
In parallel, DMC Global has seen significant changes in its leadership. James H. Schladen was appointed as the President of its subsidiary, Arcadia Products, LLC. Schladen, a seasoned leader with a history at Arcadia, brings a wealth of experience to the position. In another development, James O’Leary was appointed as the Interim President and Chief Executive Officer of DMC Global, effective since late November.
DMC Global has also amended its agreement with the Munera family, postponing the earliest date it may be obligated to purchase the remaining 40% interest in Arcadia to September 6, 2026. This move provides the company with "immediate and significant relief from potential equity dilution and increased leverage," according to O’Leary. These are just a few of the recent developments at DMC Global.
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