SAN DIEGO and EAGAN, Minn. -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the proposed acquisition of Norcraft Companies, Inc. (NYSE: NCFT) by Fortune Brands Home & Security, Inc. (NYSE: FBHS). On March 30, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Fortune Brands will acquire Norcraft. Under the terms of the agreement, Norcraft shareholders will receive $25.50 in cash for each share of Norcraft common stock.
Is the Proposed Acquisition Best for Norcraft Companies, Inc. and Its Shareholders?
Robbins Arroyo LLP's investigation focuses on whether the board of directors at Norcraft is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $25.50 merger consideration represents a premium of only 11.4% based on Norcraft's closing price on March 27, 2015. This premium is significantly below the average one day premium of nearly 54.7% for comparable transactions within the past five years.
On March 30, 2015, Norcraft reported strong earnings for its fourth quarter and full year 2014. In the fourth quarter of 2014, Norcraft reported a net sales increase of $13.5 million, or 16.7%, to $94.0 million, as compared to $80.5 million in the fourth quarter of 2013. Norcraft also reported that its income from operations in the fourth quarter of 2014 increased $2.8 million, or 62.0%, to $7.4 million, from $4.6 million for the fourth quarter of 2013.
In commenting on these results, Norcraft Chairman and Chief Executive Officer Mark Buller remarked, "We are extremely pleased with the consistent improvement in our business throughout 2014, resulting in significant growth in our net sales, Adjusted EBITDA and cash flow during the year. In the fourth quarter, our business momentum accelerated with stronger demand in both our new residential and repair and remodel end markets. We also further improved our product mix and realized price gains that helped drive a 16.7% increase in net sales during the fourth quarter. We actively managed our cost base and improved our material sourcing to grow our Adjusted EBITDA by 26.3% in the fourth quarter. As a result, we ended 2014 with a firmly established platform to continue expanding Norcraft's customer base with a broad range of higher-end, semi-custom cabinetry within the truly exceptional dealer channel."
In light of these facts, Robbins Arroyo LLP is examining Norcraft's board of directors' decision to sell the company now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects.
Norcraft shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information. Norcraft shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, firstname.lastname@example.org, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in securities litigation and shareholder rights law. The law firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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