BRISMET

Sections of stainless pipe wait to be moved to another section of the Brismet building in Bristol, Tenn., during the process of making the end product. Henrico-based Synalloy Corp. owns Brismet, formerly Bristol Metals.

An activist investment firm is upping its pressure on Henrico County-based Synalloy Corp. by attempting to take control of the company’s board of directors.

Privet Fund Management LLC, an Atlanta-based investment firm, made offers twice last year to buy Synalloy, which owns various manufacturing companies that make chemicals, metals and infrastructure for the energy and industrial sectors. Both buyout attempts were spurned by Synalloy’s board of directors.

Now, Privet has joined with UPG Enterprises LLC, an Oak Brook, Ill.-based holding company, to nominate its own slate of five directors for Synalloy’s eight-member board.

Synalloy has a small headquarters staff in the Innsbrook Corporate Center but has hundreds of employees at its operations in several states. Its subsidiary companies include Brismet, formerly Bristol Metals, a maker of stainless-steel pipes with a factory in Bristol, Tenn.

Privet offered to buy Synalloy at $20 per share last April and then again at $18.50 a share in August. Privet contends that Synalloy is underperforming its competitors and the broader market, and Privet wants to make management changes.

“We clearly believe in the long-term value creation opportunity at the company,” said Ben Rosenzweig, a partner with Privet. “We thought we would take the opportunity to pay a meaningful premium for the stock, provide existing shareholders a fair and full price for the shares and then implement some other changes to improve Synalloy on our own.”

“The company would not engage with us,” he said. “We felt there were some levels of entrenchment there.”

UPG Enterprises is a holding company with eight metals and distribution businesses focused on steel and steel-related industries. Together, Privet and UPG own almost 25% of Synalloy’s stock, which has traded between $8.33 and $19.65 a share over the last 52 weeks. Shares closed Friday at $9, down 11.68%.

In a statement Tuesday, Synalloy acknowledged that its results for 2019 — the company reported a loss of $3 million on revenue of $305 million — fell short of expectations, but the company said it has built a strong pool of assets, managed its cash flow, paid down debt and increased market share. Synalloy said it has communicated with Privet numerous times since the investment firm became a shareholder in 2016.

“This is why we are surprised — and disappointed — that Privet has now teamed up with UPG to attempt to seize control of the board and business of Synalloy,” the company said in the statement. “Shareholders should be on alert that this hostile effort to capture control by Privet and UPG offers shareholders no control premium.”

“Shareholders should also call in question Privet’s and UPG’s judgment in making an aggressive, costly and distracting board control bid at this time of extreme market uncertainty caused by the coronavirus,” Synalloy said.

Synalloy has not set a date yet for its 2020 annual meeting of shareholders. Its meeting last year was held in May.

Synalloy was based in South Carolina but started shifting administrative operations to Henrico when Craig C. Bram, a Richmond-area businessman and investor, was named the company’s CEO in 2011 after serving six years on the company’s board of directors.

The company’s chairman is Murray H. Wright, a lawyer who has worked for several Richmond-area law firms and was founder and managing director of Avitas Capital LLC, a Henrico-based investment banking firm.

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