Ansell to buy Kimberly-Clark’s personal protective equipment unit for $US640m
The blockbuster deal will see Ansell take control of personal protective equipment brands including Kimtech and KleenGuard.
Ansell’s almost $1bn deal to buy Kimberly-Clark’s personal protective equipment assets is a growth play for the Australian company, managing director Neil Salmon says, with the combined businesses “highly complementary’’.
Ansell’s shares went into a trading halt on Monday while a $US263m ($400m) institutional placement was bedded down to fund the $US640m ($973m) transaction.
Ansell will also undertake a non-underwritten share purchase plan (SPP) to raise up to $65m and take on $US377m of new debt in a bridge facility, which will be replaced with long term debt at a later date.
The raise is at a fixed price of $22.45 per share – a 6 per cent discount to the last close of $23.89 on Friday.
KCPPE designs, manufactures and markets hand, body and eye protection products under the Kimtech and KleenGuard brands, with Ansell saying the deal would extend its reach in several sectors including the growing clean-room manufacturing area, which includes battery manufacture, and also enhance its scientific business.
“KCPPE is a leading global personal protective equipment business, designing, marketing and selling innovative and differentiated safety products including gloves, protective apparel and safety eyewear,’’ Ansell said in a statement on Monday.
”Kimtech-branded products, principally gloves and protective apparel, are sold into the attractive global scientific market, where KCPPE is a trusted supplier in the fast-growing cleanroom sub-segment, supported by a technical sales force with strong end-user relationships.
“KleenGuard-branded products, including chemical protective clothing and safety eyewear, are
sold into a variety of industrial end markets. KCPPE’s customer base is global, with the majority of sales in North America.’’
Mr Salmon told The Australian that a recent investor briefing from Kimberley Clark made it apparent that the acquired assets did not line up with the US company’s long-term ambitions, meaning a deal with Ansell made sense.
“It’s a great business, so it was certainly not an easy decision for them,’’ Mr Salmon said.
“We’d been sort of planting the seeds with Kimberly, saying, ‘are you sure this is a business that you want to continue investing in, in the long term?
“Our outside-in perspective was that it didn’t seem closely related to what Kimberly Clark is famous for worldwide, its FMCG presence and also its expertise in nonwoven technology and so forth, and tissue products.
“At the same time Kimberley Clark has long-valued this business.’’
The Kimberley Clark businesses are global however derive about 70 per cent of their revenue from the US, which is also Ansell’s largest market.
Mr Salmon said the cleanroom sector was growing strongly, driven by a desire for US sovereign manufacturing capability in sectors such as semiconductors, batteries and automotive, which would drive demand for specialised products in that area.
Mr Salmon said Ansell was not actively on the hunt for more deals, with the job at hand now to make this new transaction a success.
“I’m excited by this transaction, because I think it really compounds our existing organic growth strategy,’’ he said.
“We’re buying this to grow, not just for the not for the acquired P&L, so now we’ll double down on the organic growth potential that we see ahead of us.’’
Ansell said KCPPE generated revenue of $US272m and EBIT of $66m in the 2023 calendar year.
The deal is expected to generate synergies of $US10m per annum by the third full year of ownership while there was an expected circa $US50m of tax benefits arising from the amortisation of US goodwill.
The transaction is expected to complete in the first quarter of the 2025 financial year, subject to satisfaction of antitrust approval and other conditions.
Guidance for earnings per share in the current financial year remains unchanged at US94c to US110c, excluding the impact of the Kimberly deal and associated fundraising.
In February, the group revealed it had cut almost 1300 jobs around the world as the effects of the pandemic continue to shake out, with the company now aiming to reset for growth.
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