Steel Connect issues letter to DMC Global shareholders

Steel Connect, which beneficially owns approximately 9.9% of the outstanding shares of DMC Global (BOOM), issued a public letter to the company’s board of directors. The letter said, “We have consistently attempted to engage with you in a constructive manner to help maximize value for all stockholders – of which we are the largest. We have made three actionable proposals to the Board: – Our first proposal in May 2024 to acquire all the outstanding shares of DMC we do not already own for $16.50 per share in cash: – Our second proposal in September 2024 to acquire the Company’s DynaEnergetics and NobelClad businesses for between $185-$200 million in cash and DMC stock that we own; and – Our third proposal in November 2024 to purchase preferred stock (similar to the preferred stock that the Company could have issued upon the exercise of the Arcadia put right) to enable DMC to acquire the remaining 40% portion of the Arcadia business. As a reminder, in January 2024, the Board publicly announced it would run a process to sell its DynaEnergetics and NobelClad businesses. After 10 months and likely substantial advisory fees, the Board failed to complete any transactions whatsoever. 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. This lack of engagement and urgency from the Board has been disappointing… The Board 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. 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. Arcadia has cycled through three Presidents in as many years. Arcadia has also had excessive turnover throughout its management team, and now has an Interim President who does not appear to have any experience managing a P&L. This type of churn is not healthy for any business and is emblematic of the Board’s failure to install competent leadership. In closing, we believe the Company should redeem its poison pill, which was instituted in June 2024 without stockholder approval. We believe it runs directly contrary to the best interests of stockholders to limit investor purchases at a time when the Company’s stock has been declining precipitously. In our view, the pill serves purely as an entrenchment mechanism. We call on the 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.”