Global health and hygiene company Essity has drafted in investment bank Morgan Stanley for a proposal to buy Asaleo Care in a deal that would value the company at $684 million.
Asaleo, meanwhile, is working with Luminis Partners.
The company remains in a trading halt after receiving a $1.26 per share bid from its 36 per cent share holder Essity.
Another major shareholder is fund manager Allan Gray, with 18.23 per cent.
Asaleo, a personal care and hygiene company that manufactures toilet paper, tampons, pads and paper towels, has brands such as Libra, Sorbent, Handee, Libra, Tork and Purex.
Demand surged for its products at the start of the year at the onset of the COVID-19 pandemic.
For the six months to June, the company’s earnings before interest, tax, depreciation and amortisation increased 24 per cent to $49.4m, while net profit was up 158 per cent to $18.8m.
The business is on track to deliver EBITDA at the upper end of its guidance of between $84m to $87m.
Shares last traded at $1.23, with its market value at $668m.
Essity has been tipped to take Asaleo private since about two years ago when the company was conducting a strategic review.
In about two years, the intellectual property licence of the business will be returned to Essity, which is its 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 were trading around 71c two years ago, with its market value at about $385.2m.
PEP bought into the company because the Swedish parent was capital constrained and could not invest in the local facilities.
In 2018, it sold its consumer tissue business to Solaris Paper for $180m.
Morgan Stanley has recently been working on the sales process for Asaleo’s rival, ABC Tissue behind the Quilton toilet paper brand.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.
Incitec Pivot’s fertiliser price likely too high for some
Potential bidders have been given information about Incitec Pivot’s fertiliser unit, but the jury’s still out as to how much they will be prepared to pay..