DMC Global’s Arcadia Partner Can Now Exercise Put on Remaining 40% Stake

DMC Global’s Arcadia Products minority partner can now exercise a put option that could require DMC to purchase some or all of the 40% interest it does not already own. September 6, 2026 is the first date the right can be exercised under an amendment that postponed the original deadline by nearly 21 months.

The date matters because the put has moved from a future financing risk to an immediately exercisable contractual right. DMC had not announced a put notice or purchase of the minority stake as of September 6. The company already holds its own call option over the interest, which has been exercisable since December 23, 2024.

DMC acquired a 60% controlling interest in Arcadia in December 2021. The remaining 40% is owned by New Arcadia Holdings Inc., which DMC describes as wholly owned by Synergex Arcadia Holdings LLC and as the successor to Arcadia’s previous majority owner, referred to in DMC filings as Munera. In its latest quarterly filing, DMC said the minority owner had agreed not to exercise the put before September 6, 2026.

The 40% interest carried a $187.08 million value at June 30

The size of the obligation is the central financial issue. DMC’s operating agreement values the minority interest using a predefined formula tied to Arcadia’s adjusted EBITDA over a defined period, subject to a floor value. The floor for 100% of Arcadia is $467.7 million, making the floor for the 40% minority interest $187.08 million. DMC reported the redeemable noncontrolling interest at that $187.08 million value as of June 30, 2026.

Settlement would not necessarily equal that headline figure. DMC said the amount paid would be reduced by a $24.902 million promissory note owed by the minority holder and would also be subject to potential working-capital adjustments. Using the June 30 value and subtracting only the note implies about $162.2 million before any working-capital adjustment, although the final purchase price can change under the operating agreement’s formula.

If the minority owner exercises the put, DMC can choose to pay the purchase price entirely in cash or use a mix of 20% cash and 80% newly designated preferred stock. The preferred shares would carry a 3% annual dividend and initially be valued using DMC common stock’s volume-weighted average trading price over the 60 days preceding delivery of the put notice. Voting and conversion rights would initially be capped at 19.9% of DMC’s common shares outstanding before issuance unless shareholders approve removal of that cap.

DMC has warned that, based on the purchase-price formula and its stock price at the time of its June filing, removing the cap could result in the minority holder gaining majority voting control through dilution of existing shareholders. The preferred shares could be redeemed by DMC at any time, while proportionate annual redemptions would begin June 23, 2027 and the shares would be due for redemption by the third anniversary of issuance, subject to legally available funds.

The financing question is material relative to DMC’s current balance sheet. At June 30, the company had $28.6 million of cash and cash equivalents and $60.2 million of outstanding borrowings under its syndicated credit agreement, consisting of $44.1 million on the term loan and $16.1 million on the revolver. DMC said it was evaluating funding options that could include operating cash, credit-facility borrowings and proceeds from debt or equity issuance.

September 6 ends the extension DMC negotiated in 2024

The put was originally scheduled to become exercisable on December 23, 2024, three years after DMC completed its purchase of the controlling Arcadia interest. In December 2024, DMC and the minority owner amended Arcadia’s operating agreement to push the earliest put date to September 6, 2026.

The amendment was not cost-free. DMC agreed to pay a $2.5 million fee to the Munera member and to provide monthly updates on Arcadia to directors appointed by that member. The minority owner also agreed not to deliver a put notice or transfer its units to a third party before the new date without DMC’s consent. DMC retained the right to exercise its own call option beginning December 23, 2024.

Management later adjusted DMC’s credit arrangements with the Arcadia obligation in mind. A June 2025 amendment temporarily increased the maximum leverage ratio to 3.5 times trailing 12-month adjusted EBITDA if either the put or call option is exercised, from the normal 3.0 times ceiling. The limit is scheduled to fall to 3.25 times in the third quarter after payment and then return to 3.0 times.

That flexibility does not eliminate the funding risk. DMC has said an all-cash purchase could materially increase leverage, while an equity financing could materially dilute existing shareholders. Even if DMC chooses the 80% preferred-stock route after a put exercise, it would still need to fund the cash portion and later meet dividend and redemption requirements.

Arcadia’s stronger second quarter raises the importance of the stake

The put window is opening after a better quarter for Arcadia. In the three months ended June 30, Arcadia reported $67.4 million of net sales, up 9% from a year earlier and 19% from the first quarter. Adjusted EBITDA before allocation to the minority interest was $9.15 million, up 36% year over year, with a 13.6% margin. DMC said Arcadia delivered its strongest sales performance since the second quarter of 2024.

Arcadia is a meaningful part of DMC rather than a small side business. It accounted for about 40% of DMC’s consolidated net sales in 2025. The company designs and manufactures architectural building products including aluminum framing systems, windows, curtain walls, storefronts, entrances and interior partitions, along with customized windows and doors for high-end residential construction.

Arcadia is headquartered in Vernon, California, where it lists its corporate office and plant. DMC says light manufacturing, anodizing and painting of aluminum components are performed in Vernon before products move through a broader network of service centers. That operating footprint helps explain why the minority stake carries strategic weight as well as a large potential financing requirement.

From September 6 onward, the next material development is no longer another scheduled eligibility date. It is whether the minority owner actually delivers a put notice, whether DMC elects to use cash or preferred stock if that happens, and what the final purchase price becomes under the contractual formula and adjustments. Until a notice is delivered, the right is exercisable but the purchase obligation has not been triggered.