Ansell’s retail shareholders on a winner with capital raise

The glove and protective equipment maker’s retail shareholders have been handed an easily-achieved windfall at current share prices.

Ansell’s capital raise is easy money at current prices.

Ansell’s retail shareholders will be able to reap an easy windfall from the current share purchase plan should the share price hold up, as the stock surged on news of the company’s $1bn acquisition of Kimberley Clark assets.

The glove and protective equipment manufacturer raised $400m from institutional shareholders to fund the deal, closing off that element of the capital raise successfully on Monday.

The institutional funds will be used to pay for part of the $US640m ($968m) acquisition of KCPPE, which designs, manufactures and markets hand, body and eye protection products under the Kimtech and KleenGuard brands.

Existing retail shareholders will also be able to buy up to $30,000 worth of shares each, which will be priced at the lower of the $22.45 placement price, or a 2 per cent discount to the average price in the five days leading up to the close of the shareholder raise on May 6.

At Monday’s price of $25.24 – up more than 5 per cent on the day – retail shareholders would reap more than $3700 on paper simply by taking up the new shares at full subscription.

And if they take Macquarie analysts’ word for it, they’d be doing the right thing, with the Macquarie team tipping the deal could add a quarter to the share price over the next two years.

Ansell has been weighed down in recent times by the “destocking” effect of customers winding down inventory stockpiled during the pandemic.

Macquarie analysts see the transaction, which is scheduled to close in the first quarter of 2025, as providing extra firepower to Ansell’s life sciences and cleanroom manufacturing businesses, as well as a specialised sales force.

The analysts’ numbers on the back of the announced deal imply a valuation of $30 for Ansell in two years’ time.

Macquarie also raised its rating on the stock from Neutral to Outperform.

“With commentary highlighting a normalisation of de-stocking in life sciences (a headwind for the healthcare global business unit in recent halves) as well as earnings per share (EPS) accretion from the transaction, we see the EPS growth outlook favourable, with valuation appeal at current levels,” Macquarie said in a note to clients.

Morgans is less bullish on the stock and the deal, with a Hold recommendation.

“A sizeable acquisition, along with recent reorganisation changes, adds layers of complexity that cloud earnings visibility, especially in a changing ‘dislocated’ post-Covid-19 world, in our view,” they said in a note to clients.

Morgans has a price target of $25.61 on Ansell, while Morgan Stanley’s valuation sits at $24.14.

Originally published as Ansell’s retail shareholders on a winner with capital raise