Irenic Invests in Atkore, Suggests Sale to Unlock Shareholder Value

Imagine you’re on a big soccer team, but your coach suddenly leaves and the team can’t decide if it should keep playing together or join another club. That’s a bit like what’s happening with Atkore right now—and it matters for investors who want their money to grow, not get stuck on the sidelines.

What’s Going On With Atkore?

Atkore is a company that makes electrical and safety products, like the metal pipes and cables you see in buildings and factories. They run 42 factories in eight countries and their products are important for construction and industry. Right now, the company is worth about $2.1 billion, or about $62 per share.

Recently, a group called Irenic Capital Management bought 2.5% of Atkore’s stock and is pushing for big changes. They think Atkore should consider selling itself or making some big cuts to get back on track.

Why Investors Should Care

When a company’s leadership is in trouble and its stock price drops (Atkore’s fell from $190 to $60 per share this year), it can drag down your portfolio if you own the stock, or create an opportunity if things turn around. The construction and industrial sectors also watch companies like Atkore, since their performance can signal broader trends.

Bull Case: Reasons for Hope

• Big Market Need: Atkore’s products are crucial for building and keeping infrastructure running. The need for these items doesn’t go away, even in tough times.
• Room to Cut Costs: Experts think Atkore could cut $100 million in costs, making it more profitable.
• Lower Prices Help: Atkore’s prices are now low enough that foreign competitors are backing off, which could help sales recover.
• Potential Buyout: Private equity firms might pay 8–10 times Atkore’s earnings before interest, taxes, and depreciation (EBITDA), which could mean a higher stock price for shareholders.
• Leadership Change: With the right CEO, Atkore could refocus on its strengths and boost its value again.

Bear Case: Reasons to Be Cautious

• Leadership Vacuum: The CEO just left with no successor, and the board seems unsure what to do next.
• Missteps: Atkore raised prices too high during the pandemic, which hurt its position and let in more competition.
• Non-Core Distractions: Instead of sticking to its main business, Atkore spent money on things like water infrastructure and rural broadband that didn’t pay off.
• Rising Costs: Even though revenue dropped by $1 billion, Atkore’s overhead costs and staff numbers went up by 40%.
• Rushed Decisions: The company started selling off non-core assets without a permanent CEO, which seems risky and poorly timed.

How Does This Compare?

Atkore isn’t alone in facing these challenges. According to Harvard Business Review, companies with strong leadership and clear focus outperform those that get distracted or lose their way after big management changes. History shows that companies who quickly bring in experienced, industry-specific leaders are more likely to recover and grow.

What Should Investors Watch?

• Will Atkore’s board bring in leaders with real experience in the electrical industry?
• Does the company cut unnecessary costs and focus on what it does best?
• Will Irenic Capital help bring in new board members who can guide these changes?
• Is a sale or merger on the table, and at what valuation?

Investor Takeaway

• Stay Alert: News about new leadership or a possible sale could move Atkore’s stock quickly. Set alerts if you own or watch ATKR.
• Look for Focus: Companies that stick to their main business tend to perform better. Watch for Atkore to sell off distractions and double down on electrical products.
• Board Changes Matter: If Irenic succeeds in getting new, experienced directors on the board, it could be a sign of positive change.
• Know the Risks: Without a strong new CEO, Atkore could keep struggling. Don’t bet too much on a fast turnaround.
• Consider Sector Trends: The construction and industrial sectors are sensitive to economic changes. Use Atkore as a window into the health of these broader markets.

For the full original report, see CNBC