The trading week has kicked off on a positive note so far this Monday. At the time of writing, the ASX 200 has gained a decent 0.21% and is up to around 7,789.3 points at present. But Ansell Ltd (ASX: ANN) shares aren't joining the party today.
Ansell shares closed at $23.89 each last Friday. And that's where they'll be staying, at least for a while. This morning, the ASX 200 glove and bodywear manufacturer announced that its shares would be placed in a trading halt.
The purpose of this halt was to allow Ansell to reveal a new acquisition, and accompanying capital raise to fund it.
ASX 200 stock announces major acquisition and capital raise
Yes, Ansell has revealed that it has entered into a binding agreement to acquire 100% of the assets of Kimberly-Clark's Personal Protective Equipment (KCPPE) business.
Kimberly-Clark is the US-based consumer staples giant behind popular products like Kleenex and Huggies.
Ansell will reportedly acquire this company's PPE business for US$640 million ($974.6 million) in cash. This business includes brands like Kimtech and KleenGuard. As well as glove, mask, apparel and eyewear manufacturing facilities.
This acquisition will be funded by a $400 million institutional share placement. That's in addition to a $65 million share placement plan for retail investors.
Assuming all goes to plan with this acquisition, Ansell estimates that the merger will be completed by the first quarter of the 2025 financial year.
The company is expecting significant synergies to result from this merger. Ansell is estimating net cost synergies of approximately US$10 million per annum by the third year. That's in addition to an expectation that it will provide a significant boost to the company's earnings per share (EPS) and earnings margins.
According to Ansell, it will also see the company's annual revenues double from roughly US$140 million to around US$300 million.
Ansell also told investors that its earnings guidance of 94-110 US cents in EPS for the 2024 financial year remains unchanged, "excluding the impact of the Acquisition and Transaction Funding". Ansell is anticipating that the acquisition will see its EPS over the 2024 financial year reduced by 1-2 US cents though.
Here's some of what Ansell CEO Neil Salmon had to say on this news today:
For many years, we have assessed a combination with KCPPE as one of our most attractive acquisition opportunities and I'm delighted that we have now reached agreement with K-C that the optimal path forward for this business is under Ansell ownership…
Our existing footprint, in addition to our global organisation and supply chain, creates the opportunity to generate significant synergy value from the acquisition while also enhancing our combined organic growth potential and we are excited about the benefits this will create for Ansell's customers and shareholders.
Ansell share price snapshot
Ansell shares may be suspended today, but investors have not enjoyed a lucrative 2024 so far this year. Year to date, the Ansell share price remains down by 5.42%. Those losses stretch to 13.32% over the past 12 months.
The company also remains down around 44% from its 2021 highs of over $42 a share:
At the last Ansell stock price of $23.89, this ASX 200 stock had a market capitalisation of $2.98 billion, with a dividend yield of 1.92%.
