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Bain Capital says no deal for BWX Limited (ASX:BWX)

The BWX Limited (ASX: BWX) share price has fallen by 5% this morning after it announced that Bain Capital would not be going ahead with a takeover.

The Bain Consortium, which included Bain Capital, John Humble and Aaron Finlay, were not able to submit a binding proposal despite all this time deliberating.

BWX’s Chairman, Ian Campbell, said “A substantial amount of time and resources have been committed by the independent board committee (IBC), management, our advisers and the Bain Consortium. Nevertheless, in the absence of a binding proposal, it is clear that we have reached a point where management’s time is better spent focusing on the substantial growth opportunities available to the Company.”

The takeover bid has been costly for some participants. John Humble and Aaron Finlay have agreed to resign from their executive and Board roles.

Interim CEO Myles Anceschi has now been appointed permanent CEO. According to BWX, he has extensive experience in marketing, sales, operations, manufacturing, business development and strategic planning.

BWX has a lot of work to do to win over investors again, with the share price sinking to below $4. The company will work on accelerating Sukin’s growth in Australia and overseas, expanding BWX’s other brands and enhancing the online sales channels.

During the strategic review by the IBC, a number of parties approached BWX with joint venture, distribution and licencing proposals to grow BWX’s brands in international markets.

BWX did get a vote of confidence from major shareholder Bennelong. Chief investment officer Mark East said “We continue to believe very strongly in the attractive medium and long term growth opportunities available to BWX. The culmination of the strategic review represents a clean break for the company, and we provide our full support to the IBC, Myles and his management team in driving the future growth of the business.”

Foolish takeaway

BWX is currently trading at 18x FY18’s underlying earnings with a grossed-up dividend yield of 2.8%.

Whilst the potential legal claim in the US and integration risks hang over BWX, I personally think that the fall in share price now reflects those risks and offers good value if BWX can continue to grow its earnings per share (EPS) by double digits over the medium-term.

I would be happy to buy a parcel at today’s share price and accumulate as time goes on if the business shows it is growing well and improving the balance sheet.

Another exciting share I’m keeping a keen eye on is this top ASX growth share that is expanding in Asia.

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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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