MINNEAPOLIS -- H.B. Fuller is accelerating a dispute with an activist investor by rejecting its bid to buy one of the Minnesota-based adhesive company’s business units for more than $1 billion.

Ancora Group Holdings quickly responded, reaffirming its intention to buy the building adhesive solutions business in a letter sharply critical of Fuller’s leadership.

The backstory. During Fuller’s March earnings call, H.B. Fuller CEO Celeste Mastin said while acquisitions remain a strategic “cornerstone,” the company was hitting pause in the near term.

In May, though, Advanced Medical Solutions Group said Fuller made an unsolicited bid for the company. Ancora Group Holdings took issue with the move, saying Mastin and the board had gone against what they said in March, and said the company is underperforming and asked for a comprehensive review of strategic alternatives, according to a letter to Fuller’s board.

The Vadnais Heights-based company went ahead with a formal $943 million bid for the company, which would push Fuller more into the health care adhesives area.

Ancora immediately escalated its campaign, offering to buy the building adhesive solution business (BAS) for $1.1 billion to $1.2 billion.

The conversation. Fuller on Monday officially rejected the bid. The company issued an open letter addressed to principals at Ancora and signed by H.B. Fuller board Chair Terry Rasmussen, who is also CEO of Minneapolis-based Thrivent.

“After careful consideration, the board has determined that the proposal materially undervalues the BAS business, ignores its prospects for future growth and value creation, fails to appreciate the importance of this segment to our leading pure play adhesives platform, and lacks key details,” the letter said.

In the response, Ancora said: “All shareholders of H.B. Fuller should be deeply disappointed with the board’s decision to irrationally reject a highly-credible proposal to acquire the company’s BAS segment without any outreach to us,” wrote officials from Ancora.

What’s next. Expect more back-and-forth between the two companies, if Ancora follows through with intentions outlined in the letter.

“If the [Fuller] board wants to avoid a prolonged public campaign for change, it needs to either install capable leadership or initiate a credible review of strategic alternatives – there is no third path,” Ancora officials wrote.

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