Essity has role for tissue maker Asaleo Care

Some market analysts are betting Asaleo Care’s parent company Essity will take the toilet paper and tissue maker private with the Australian-listed group hiring Luminis Partners to conduct a strategic review.

The understanding is that all options are on the table, including a sale of the entire business or part of it — perhaps the tissue division.

Essity, a global hygiene and health company, already owns 35 per cent of the business and some are betting it will acquire the remainder.

It is worth noting that in four years the intellectual property licence of the business will be returned to its major Swedish shareholder and former owner.

Asaleo was previously known as SCA Hygiene and owned by Essity before Pacific Equity Partners acquired a stake in the company in 2011.

The pair floated the business in 2014 with a $996 million market value.

However, while shares at that time were around $1.65, they closed yesterday at 71c, taking its market value to $385.2m.

PEP bought into the company because the Swedish parent was capital constrained and could not invest in the local facilities.

Luminis was hired before the group yesterday reported a $101.5m half-year loss as it wrestles with soaring costs and tough competition.

It is also burdened with a $309.7m debt pile, and with hedge funds on the register,
one option may be a recapitalisation.

The personal care and hygiene company has brands such as Sorbent, Handee, Purex, Libra and Treasures.

Asaleo said the strategic review was moving rapidly and the outcome would be announced in the fourth quarter.