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BWX Ltd (ASX:BWX) share price rises 35% on first day after takeover offer

The BWX Ltd (ASX: BWX) share price has risen by a huge 35% today to $5.95. This huge rise occurred due to a large potential takeover offer by John Humble (CEO of BWX), Aaron Finlay (Finance Director of BWX) and Bain Capital.

Considering the share price yesterday was $4.41, the cash offer of $6.60 was a huge premium of almost 50%. Although this is still far below the all-time highs BWX experienced at the start of 2018 of just above $8.

Shareholders also have a scrip alternative in a newly incorporated acquisition entity of 75% shares and 25% cash. I’m not sure that many retail investors would want to be a minority shareholder alongside Bain Capital.

According to AFR sources, the main reason why the company is thinking about going unlisted is that Mr Humble and Mr Finlay want to make more acquisitions to build scale in Australia and overseas. But, investors want the company to prove it can integrate the new businesses into the fold before looking for more. Big shareholders think BWX is now open to more takeover offers and the Independent Board Committee (IBC) will look for more offers.

It’s sad that management felt the need to essentially delist BWX. I think it has a very promising future with its stable of natural beauty brands. Consumer demand for natural beauty products is growing even faster than the general beauty industry.

Foolish takeaway

It’s a shame that the first day of trading didn’t lead to the share price rising to near $6.60. If the IBC can find alternative suitors then BWX could get an even bigger offer. For now, I’m holding onto my shares until I can get close to $6.60 – or more if another offer comes in.

If I do sell my BWX shares I'll want to redeploy the cash into one of these top stocks.

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Motley Fool contributor Tristan Harrison owns shares of BWX Limited. The Motley Fool Australia owns shares of and has recommended BWX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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