In key news on Australian stocks, Ansell Limited (AU:ANN) shares went on a trading halt after the company announced the acquisition of Kimberly-Clark’s (NYSE:KMB) personal protective equipment (PPE) unit and a related capital issue to fund the transaction. The deal, which is valued at $640 million, is aimed at bolstering Ansell’s global market presence, particularly in the scientific sector.
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The company requested a pause in share trading to facilitate the announcement. Trading is anticipated to resume on April 9th. Year-to-date, ANN stock has gained 5.42%.
Deal Synergies
Ansell is a leading manufacturing company specializing in protective industrial equipment and medical gloves. Kimberly-Clark’s PPE unit includes well-known brands like Kimtech and KleenGuard, which will further widen Ansell’s product portfolio along with cost synergies and tax benefits.
The company expects to achieve approximately $10 million in annual net cost synergies on a run-rate basis by the third year of the acquisition. Additionally, Ansell expects low-teens EPS accretion on a FY24 pro forma basis, including run-rate net cost synergies, and mid-to-high single-digit EPS accretion, excluding synergies.
The deal is expected to be finalized in the first quarter of FY25, depending upon regulatory approvals.
Funding of the Deal
The acquisition will be funded through a mix of equity-raising and new debt. Ansell announced a fully underwritten placement of new, fully paid ordinary shares to eligible institutional investors to raise approximately AU$400 million. The institutional placement will be offered at AU$22.45 per share, indicating a 6% discount to ANN stock’s closing price on Friday.
After the placement is finalized, Ansell will offer eligible shareholders the chance to take part in a non-underwritten share purchase plan (SPP), aiming to raise AU$65 million. Apart from this, the company will raise $377 million of new debt through a bridge facility.
Ansell also confirmed its adjusted EPS guidance for Fiscal 2024. The company noted that the institutional placement would have a slight impact on its adjusted EPS, considering the new shares issued and interest income on related equity cash proceeds before the completion of the acquisition.
What is the Prediction for Ansell Shares?
According to TipRanks consensus, ANN stock has been rated a Hold based on four Holds, one Buy, and one Sell recommendation. The Ansell share price forecast is AU$26.70, which implies about 12% upside potential.
