10/11/2025
Irenic Takes a Stake in Atkore, Urges Company to Consider a Sale
CNBC (10/11/25) Squire, Kenneth
Atkore (ATKORE) is a manufacturer of electrical products for construction and renovation markets, and safety and infrastructure products for the construction and industrial markets. The company’s segments include electrical and safety & infrastructure. The company has a stock market value of $2.09 billion ($61.97 per share). Irenic Capital Management, founded in October 2021 by Adam Katz, a former portfolio manager at Elliott Investment Management, and Andy Dodge, a former investment partner at Indaba Capital Management, has a 2.5% stake in Atkore. Irenic has thus far focused on strategic activism, recommending spinoffs and sales of businesses. On Sept. 30, Irenic announced its new stake in Atkore and that it is urging the company to pursue a potential sales process. The pandemic catalyzed a surge in construction and, in turn, the demand for Atkore’s electrical products that are essential in the wiring processes. As a result, the company got aggressive in pricing and, from fiscal year 2019 to 2022, revenue grew from $1.9 billion to $3.9 billion, and EBITDA grew alongside from $300 million to $1.3 billion. However, as we have seen with many companies, demand ultimately normalized after Covid and revenue stopped growing. To make matters worse, Atkore’s aggressive pricing strategy backfired, as it invited import competition into a market that had long been protected by high freight costs and distributor preference for local supply. By raising prices too sharply, they effectively undermined their own market position. As a result, revenue has declined to $2.9 billion and EBITDA to $462 million. Moreover, despite a $1 billion decrease in revenue, SG&A has increased, and the company’s headcount has risen over 40%. On top of this is a misallocation of capital. Instead of using Covid-era windfalls to invest into the core electric business, management has pursued non-core ventures such as water infrastructure and fiber conduit for rural broadband, many of which projects never materialized. Now, a company that once traded at the top of the market around $190 per share in early 2024, has fallen all the way down to around $60 per share; and amid this underperformance, in late August, CEO Bill Waltz unexpectedly announced his retirement without a successor in place. With no CEO, operational and capital challenges, and a poor market perception, Atkore is now at a critical inflection point where the board will have the biggest decision it will ever make that will determine the outcome for shareholders. Kenneth Squire, founder and president of 13D Monitor, notes that the most important thing a board does is identify and retain a CEO, and says Atkore is now at that point. However, when a company faces similar issues to Atkore and is on the precipice of a serious restructuring, the board needs to make one more decision before hiring a new CEO — whether the company should remain independent or not. We would expect that Irenic would want one or two new directors identified by them on the board to take part in this analysis and decision, likely independent directors with relevant experience. Atkore currently trades at approximately 6.5x EBITDA but offers clear cost cutting and divesture opportunities that private equity may be able to more effectively execute. Thus, it is fair to assume a takeout at multiple turns above the company’s current valuation, potentially 8 to 10 times EBITDA. If a review of strategic alternatives concludes that an acquisition would happen in that range, then the board would need to use that as the benchmark against a standalone plan. The first step in a standalone plan would be identifying the right CEO who would be tasked with realigning the company’s operational and capital focus with its core electrical business, divesting non-core assets, cutting costs, and implementing pricing discipline. There is definitely at least $100 million of costs that could be cut from SG&A, according to Squire, and the headwinds that caused the decline in revenue have now reversed, with pricing low enough to once again discourage importers even before the issuance of tariffs, which is a tailwind for Atkore. "But it is worth repeating that none of this is possible without the right CEO and it is important to have the best possible board to make that decision, and this board has given shareholders the right to be worried," Squire adds. "Currently, both the company's chairman and former CEO come from water industry backgrounds, likely contributing to the strategic shift away from the company's core. Moreover, Atkore recently announced a strategic review focused on non-core asset sales, including its water conduit business. While this might be the right decision, launching a strategic review without a permanent CEO seems rushed and poorly timed, and conducting such a review at this time without weighing the possibility of a full sale is even more perplexing. A refreshed board with directors who bring in relevant electrical industry expertise that can guide the CEO succession process, and the sale analysis would be an essential first step." Squire concludes by emphasizing Irenic's significant experience in strategic activism, identifying companies that are struggling in the public markets and helping implement spinoffs and sales of businesses. "The nomination window for directors opened on Oct. 2 and we do not think it is a coincidence that Irenic went public with their campaign the day prior to the nomination window opening. We expect that they will be talking to the company about board composition. Ideally, shareholders would benefit most with the addition of a couple of new independent directors with relevant experience and having Irenic as an active shareholder to support the board in its analysis."
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