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Friendly Activist Ubben Owns 16.6% Stake in Freshly-Separated Armstrong Flooring

In a new Schedule 13D filing, Jeffrey Ubben’s ValueAct Capital reported a new stake of 4.60 million shares in Armstrong Flooring Inc. (NYSE:AFI), which make up 16.6% of the company’s outstanding common stock.

Earlier this month, the producer of resilient and wood flooring products completed its separation from Armstrong World Industries Inc. (NYSE:AWI). In 2015, Armstrong World Industries announced plans to separate its Resilient Flooring and Wood Flooring segments, which are now operated by Armstrong Flooring, from its Building Products (Ceilings) segment. The separation was completed through a pro rata distribution, with each AWI shareholder receiving one share of AFI common stock for every two shares of AWI common stock. As Mr. Ubben’s ValueAct owned 9.20 million shares of Armstrong World Industries Inc. (NYSE:AWI) on December 31 and kept its equity stake unchanged through the completion of the separation, the friendly activist investor received 4.60 million shares of newly-formed Armstrong Flooring Inc. (NYSE:AFI). The aforementioned separation was set to create two leading companies in their respective markets, as well as enable the two companies to benefit from increased strategic focus, restructured operating structures and more efficient capital allocation. The filing also reveals that the activist hedge fund reached an agreement with Armstrong Flooring under which Jacob H. Welch, a partner at ValueAct Capital, was appointed to the company’s Board of Directors. However, Mr. Welch will be required to resign from the Board should ValueAct’s ownership in the company drop below the 7.5% mark.

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