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Ansell suspends shares ahead of $975 million acquisition of Kimberly-Clark’s PPE business

Medical products and protective wear group, Ansell (ASX:ANN), made headlines on Monday as it announced the suspension of its shares pending the disclosure of its proposed acquisition of the personal protective equipment (PPE) business of US paper products giant, Kimberly-Clark. The acquisition is valued at $US640 million (approximately $A975 million).

Ansell revealed its financing plan for the acquisition, intending to cover the near $1 billion cost through a $A400 million fully underwritten institutional placement and $US377 million of committed new debt via a Bridge Facility, equivalent to around $A572 million. The institutional placement will be offered at a price of $A22.45 per share, representing a slight 6% discount from the closing price of $23.89 on the preceding Friday.

Additionally, Ansell announced its intention to undertake a non-underwritten Share Purchase Plan aimed at eligible shareholders, with the goal of raising up to $A65 million.

The business being acquired from Kimberly-Clark specializes in designing and marketing hand, body, and eye protection products under the well-known Kimtech and KleenGuard brands. These products cater to customers in global Scientific and Industrial segments. Ansell anticipates that this acquisition will accelerate the delivery of its growth strategy, bolstering its global position in lucrative and expanding segments, particularly in the Scientific domain where Ansell’s expertise is highly esteemed.

Furthermore, Ansell foresees synergistic benefits from the acquisition, anticipating economies of scale through combined supply chain and organizational efficiency. The company also projects $US10 million in cost savings by the third year of ownership, along with approximately $US50 million in value from tax benefits related to the amortization of US goodwill.

The acquisition is slated for completion by the first quarter of 2025.

Ansell’s CEO, Neil Salmon, expressed optimism about the proposed deal, emphasizing its strategic significance. He highlighted the alignment of the acquisition with Ansell’s core strengths and growth objectives. Salmon emphasized the potential to expand Ansell’s product portfolio and enhance its global footprint, ultimately benefiting both customers and shareholders.

Ansell also provided an update on its June 30 outlook, affirming its adjusted earnings per share (EPS) guidance for the fiscal year. The company stated that the placement would marginally impact its adjusted EPS, factoring in the issuance of new shares and interest income on related equity cash proceeds prior to the completion of the acquisition.

In summary, Ansell’s proposed acquisition of Kimberly-Clark’s PPE business represents a significant strategic move aimed at strengthening its market position and driving future growth. With a clear vision for synergies and value creation, the company looks poised to capitalize on emerging opportunities in the global protective wear market.

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