Ansell shares soar on $400m placement
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The news: Shares in Ansell surged in morning trading on the ASX after the personal protective equipment (PPE) manufacturer announced the successful completion of a $400 million placement to partially fund the acquisition of Kimberley-Clark's PPE business (KCPPE).
The numbers: Ansell shares were trading 7.5% higher at $25.69 by 10:45am AEDT.
On Monday Ansell announced the USD640 million ($974 million) deal for KCPPE, funded through the now completed fully underwritten institutional placement, and USD377 million of committed new debt.
The placement was priced at $22.45 a share, representing a 6% discount on Friday's closing price of $23.89.
Ansell issued 17.8 million new fully paid ordinary shares, with strong interest from existing and new institutional investors. The company's share purchase plan, which will open on 15 April and close on 6 May, will offer eligible shareholders the opportunity to buy up to $30,000 of new shares, targeting a raise of up to $65 million.
Morgan Staley analysts said they expected the acquisition to reduce Ansell's price-to-earnings ratio from 15.1x to 14.2x in FY25, and from 13.6x to 12x in FY26, suggesting a 10% upside to the group's current share price at FY25.
The context: Ansell said the acquisition, which is expected to complete during the first quarter of FY24, would improve its position in chemical protective clothing, its product life cycle sustainability through the ownership of KCPPE’s product recycling service, strengthen its EBIT margin, offer scale benefits through the combined supply chain and organisation teams, and value creation.
The sources: ASX announcement, Morgan Stanley research
