Wesfarmers share price on watch amid $169m Silk Laser takeover offer

Wesfarmers is going shopping at the beauty side of the market.

| More on:
A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Wesfarmers recently sold down its stake in Coles
  • These funds are now being put to use with the potential acquisition of Silk Laser
  • Wesfarmers has tabled an offer valuing the clinic operator at $169 million

The Wesfarmers Ltd (ASX: WES) share price will be one to watch closely on Thursday.

Why is the Wesfarmers share price on watch?

The Wesfarmers share price will be on watch on Thursday after the company identified its next takeover target.

Just a matter of days after selling down its stake in Coles Group Ltd (ASX: COL), the company is ready to put the funds to work to acquire Australia's largest specialist clinic networks, Silk Laser Australia Ltd (ASX: SLA).

According to the release, Wesfarmers Health has tabled a non-binding offer of $3.15 cash per share. This represents a 30% premium to its last close price and values Silk Laser's equity at $169 million. It is, however, worth noting that the offer is below the Silk IPO price of $3.45 per share.

The indicative proposal also provides for the payment of a fully franked dividend of up to a maximum of 10 cents per share. However, the cash component of any such dividend will reduce the cash consideration accordingly.

Wesfarmers notes that Silk is one of the largest non-surgical aesthetics clinic operators in Australia and New Zealand with a network of over 140 clinics. If the takeover is successful, it will become part of the Wesfarmers Health division. Management expect it to complement the division's existing presence in the sector through its ownership and operation of Clear Skincare Clinics.

What's next?

The release notes that Silk Laser has granted Wesfarmers up to 30 business days to undertake exclusive due diligence, with potential to extend the exclusivity period for a further 10 business days in certain circumstances.

As things stand, the Silk board of directors intends to unanimously recommend to its shareholders that they vote in favour of the scheme of arrangement. Each director intends to vote any shares they control in favour of the scheme.

Both are subject to the parties agreeing a scheme implementation deed on terms no less favourable than in the indicative proposal, the independent expert's report, and there being no superior proposal.

One of the company's largest shareholders, WAM Capital Limited (ASX: WAM), which owns 9.3% of Silk's outstanding shares, has confirmed its support for the indicative proposal. So much so, it has entered into a voting agreement which is subject to there being no superior proposal and the independent expert's report.

Silk Founder and Managing Director, Martin Perelman, was "pleased" with the news and believes "it is in the best interests of shareholders to engage" with Wesfarmers.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group and Wesfarmers. The Motley Fool Australia has recommended Silk Laser Australia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

Projection of two hands being shaken on a deal.
Materials Shares

Sayona Mining shares sink 13% on Piedmont Lithium merger news and capital raise

This merger will create the largest lithium producer in North America.

Read more »

Miner looking at a tablet.
Materials Shares

Down 28% in 2024, why this ASX 200 lithium stock could now be 'deeply undervalued'

The ASX 200 lithium stock has drawn plenty of investor attention over the past month.

Read more »

Woman looking at her tablet at a warehouse.
Mergers & Acquisitions

ASX 200 stock slides on huge $13 billion buyout news

ASX 200 investors are mulling over the $13 billion merger implications on Wednesday.

Read more »

Rocket powering up and symbolising a rising share price.
Mergers & Acquisitions

Guess which ASX microcap stock just rocketed 67% on takeover news

Investors are sending the ASX microcap stock flying amid a takeover bid.

Read more »

A group of business people pump the air and cheer.
Mergers & Acquisitions

This ASX small-cap stock is exploding 75% on takeover news!

The takeover premium is large.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock just rocketed 40% on takeover news

A colossal company finds value in the small end of our ASX town.

Read more »

Data Centre Technology
Mergers & Acquisitions

ASX 200 stock nabs $400 million data centre amid AI rush

Another way to invest in the enablers of artificial intelligence is being built.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »