Avon Protection (AVON) is facing a call to sell itself from a shareholder who said it was no longer fit to be a standalone business.
Ancora Alternatives, a US-based hedge fund, said the company should begin “a full and fair strategic alternatives review to maximise value” and prevent further losses to shareholders.
Ancora built a 5.1 per cent stake in Avon Protection in December last year, according to data provider FactSet. It said it had been engaged with the company’s board privately to discuss its underperformance but had decided to go public because of a “clear failure to address our concerns”.
Half-year results last month “only heightened our trepidation that Avon’s business model is no longer suitable for a standalone public entity”, Ancora’s letter said. Given the scale of the turnaround it faces, it would be better served as part of a bigger organisation, it added.
Avon Protection’s shares have fallen by 73 per cent over a three-year period during which it sold its Milkrite business for £180mn and spent the proceeds investing in defence. It has since had to record large impairments to the value of its body armour business, though, which is being wound down after some of its armour plates failed US military tests in late 2021.
The company replaced its chief executive and CFO last year, and new chief executive Jos Sclater said last month that it had “developed strategic initiatives to further improve the business over the medium term to accelerate growth, improve margins and returns on capital”.
Avon Protection’s shares rose by 2 per cent in early trading. The company declined to comment.
