Wesfarmers share price higher on Silk Laser takeover U-turn

Wesfarmers is back in the race to acquire Silk Laser.

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The Wesfarmers Ltd (ASX: WES) share price is rising on Monday.

In morning trade, the conglomerate's shares are up almost 2% to $48.90.

Why is the Wesfarmers share price?

The Wesfarmers share price is rising after investors responded positively to the release of an update in relation to the company's pursuit of Silk Laser Australia Ltd (ASX: SLA).

Back in April, the company made a non-binding $3.15 cash per share offer to acquire the non-surgical aesthetics clinic operator.

However, last month, EC Healthcare outbid Wesfarmers by tabling a competing offer of $3.35 per share to acquire Silk Laser.

Wesfarmers was given the opportunity to match this bid but decided not to exercise its matching rights under the process deed. At that point, it looked like the deal was dead for Wesfarmers.

But out of the blue, this morning Wesfarmers announced that its wholly-owned subsidiary, Australian Pharmaceutical Industries, has entered into a scheme implementation deed (SID) to acquire 100% of Silk's outstanding shares for $3.35 cash per share, by way of a scheme of arrangement.

This implies an equity value for Silk of approximately $180 million, based on its 53.76 million fully diluted shares outstanding.

The scheme also allows for the payment of a fully franked dividend of up to 10 cents per share. However, the cash consideration of $3.35 per share will be reduced by the cash component of any such dividends.

Why acquire Silk Laser?

Wesfarmers Health's managing director, Emily Amos, believes the acquisition would complement its existing Clear Skincare Clinics, providing scale and efficiency benefits through an expanded presence in the growing market for aesthetic products and services. Amos said:

Wesfarmers Health's acquisition of SILK would provide SILK franchisees and business owners with the benefits associated with being part of a broader healthcare, wellness and beauty network and access to capital to support future growth.

The due diligence process highlighted strong operational and cultural alignment between our businesses, and should the Scheme be successful we look forward to working with the SILK team and SILK's franchise partners to support their customers and deliver continued growth.

The Silk board has unanimously recommended that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert's report.

The Wesfarmers share price is now up 10% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Silk Laser Australia. 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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