M&A  January 28, 2025

Steel Connect continues DMC Global acquisition effort, blasts board

BROOMFIELD — In a letter to DMC Global Inc.’s (Nasdaq: BOOM) board of directors, Warren Lichtenstein, the executive chairman of supply-chain management firm Steel Connect Inc., reiterated his company’s desire to acquire all or part of DMC’s business and took leaders of the Broomfield-based oilfield-services, construction-products and infrastructure operator to task for “the continued destruction of stockholder value.”

Steel Connect made several unsolicited — and thus far unsuccessful — bids to buy DMC, which has struggled with leadership continuity and has seen its stock price lose more than 55% of its value over the last 12 months, after DMC began exploring its options for selling off DynaEnergetics, the company’s energy-industry services division, and NobelClad, DMC’s industrial infrastructure and transportation division. DMC’s other business unit is Arcadia, a supplier of architectural building products.

Steel Connect, which owns 9.9% of the outstanding shares of DMC Global Inc., said the company has “consistently attempted to engage with (the DMC board) in a constructive manner to help maximize value for all stockholders — of which we are the largest.”

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The would-be buyer claims to have made DMC three offers:

  • Steel Connect made a bid last May to buy the remaining DMC share that it doesn’t already own for $16.50 per share. For context, DMC’s stock was trading around $8 on Tuesday morning.
  • Last September, Steel Connect offered to buy DMC’s DynaEnergetics and NobelClad businesses for between $185 million and $200 million in cash and stock.
  • Then in November, Steel Connect proposed buying preferred stock from DMC to enable the Broomfield company to acquire the 40% portion of the Arcadia business that it doesn’t currently own. DMC bought a 60% controlling stake in Arcadia in 2021 in a deal worth about $282.5 million.

“While stockholders wait patiently, no progress on this strategic review or our proposals has been publicly communicated other than a statement that the sales process for DynaEnergetics and NobelClad was terminated and a brief public statement that our initial proposal of $16.50 per share for the entire Company was inadequate,” Lichtenstein’s letter said. “This lack of engagement and urgency from the Board has been disappointing.”

In response to Steel Connect’s letter, DMC’s board said this week that the company “and its advisors have continued to work diligently and in good faith with Steel Connect to enable it to finally advance and timely submit an actionable proposal to acquire the Company, including providing evidence of its ability to fund.”

DMC’s board said it is “committed to evaluating the Company’s alternatives, including the execution of its standalone plan, and pursuing the path that it believes to be in the best interests of all stockholders.”

Beyond reiterating Steel Connect’s desire to acquire DMC assets, Lichtenstein’s letter said DMC leadership has “utterly failed in its duty to properly plan for leadership succession and has approved an outlandish amount of executive severance for a Company of its size.”

Michael Kuta, DMC’s former CEO, left the company last November and was replaced on an interim basis by DMC chairman James O’Leary.

“Over approximately the past two years, DMC has had four CEOs, co-CEOs, or interim CEOs, and those who have departed have received a total of more than $4 million in severance payments,” Lichtenstein’s letter said.

Steel Connect called on the DMC board “to act swiftly to address our concerns and respond to our proposals. We reserve all rights to take any action we deem necessary to protect stockholders’ best interests.”

In a letter to DMC Global Inc.’s (Nasdaq: BOOM) board of directors, Warren Lichtenstein, the executive chairman of supply-chain management firm Steel Connect Inc., reiterated his company’s desire to acquire all or part of DMC’s business and took leaders of the Broomfield-based oilfield-services, construction-products and infrastructure operator to task for “the continued destruction of stockholder value.”

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A Maryland native, Lucas has worked at news agencies from Wyoming to South Carolina before putting roots down in Colorado.
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