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A fund manager just bought more BWX Limited (ASX:BWX) shares, I sold mine

We are no closer to knowing whether the Bain Capital takeover of BWX Limited (ASX: BWX) is going ahead yet. What we do know is that the Independent Board Committee (IBC) has appointed Macquarie Group Ltd (ASX: MQG) as its financial adviser, Bell Financial Group Ltd (ASX: BFG) as an independent adviser and Minter Ellison as a legal advisor.

The IBC, with the assistance of its advisers, intends to review the proposal and will update shareholders and the market when there’s something to announce. As of yet, there is no guarantee that a binding proposal will be agreed.

I thought it was an interesting move that NN Group N.V. (from the Netherlands) increased its holding by around 1.5 million shares, to increase its holding to 9.9% of BWX on 1 June 2018.

The share price is hovering just over $6 compared to the offer price of $6.60. Plus, there may yet be another offer competing offer to come in.

However, I decided to sell my BWX shares, even though there could be at least a gain of 10%.

As regular readers would know, I’m a fan of BWX. Natural beauty is a faster-growing segment of the growing beauty industry. BWX’s Sukin range is popular and a market-leader, plus it’s growing in several overseas markets.

I did like BWX’s acquisition choices to expand into the USA. It made sense, there could be synergies with getting Sukin into the US market and selling the US brands in Australia.

Most investors wanted BWX to consolidate what it had acquired. It now has a lot of different brands that it is trying to grow. It’s quite easy to get left behind in the beauty world if you’re not coming out with new products, or if you don’t have undoubtedly the best product.

However, the CEO and Finance Director of BWX believe that the best way forward is to continue acquiring more natural beauty brands. Perhaps this is a way to snuff out the competition or perhaps to quickly grow BWX. Either way, this is the reason why management wanted to take the company private.

Foolish takeaway

There is a good chance that BWX will be changed into a private company, there’s a decent chance the takeover offer will go ahead. There is a chance that the takeover offer doesn’t go ahead and some of the management team don’t stay as management. I decided to sell, but if the offer were to fall through and the share price went back to under $4.50 I’d be interested to buying back in.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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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