Ansell shares jump 14% amid blockbuster acquisition

Ansell is making a big acquisition and it could be a big boost to its earnings.

| More on:
A smiling businessman in the city looks at his phone and punches the air in celebration of good news.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ansell Ltd (ASX: ANN) shares have returned from their trading halt on Tuesday with a bang.

In morning trade, the health and safety products company's shares are up 14% to $27.20.

Why are Ansell shares jumping?

Investors have been buying the company's shares this morning after it released a big announcement.

According to the release, Ansell has successfully completed a A$400 million (US$263 million) fully underwritten institutional placement of approximately 17.8 million new fully paid ordinary shares to eligible institutional investors.

The placement was undertaken at a price of A$22.45 per new share, which represents a 6% discount to where Ansell shares last traded.

Ansell advised that it received strong interest in the placement from existing and new institutional investors.

The company will now push ahead with its share purchase plan (SPP), which is aiming to raise a further $65 million. The SPP will be priced at the lower of the placement price and a 2% discount to the five-day volume weighted average price of Ansell shares up to and including the closing date of the SPP. This is currently scheduled for 6 May 2024.

Why is Ansell raising funds?

As we covered here on Monday, Ansell is raising funds for a blockbuster acquisition.

The company has entered into a binding agreement with Kimberly-Clark Corp (NYSE: KMB) to acquire 100% of the assets of its Personal Protective Equipment (PPE) business.

Kimberly-Clark is the US-based consumer staples giant behind popular products such as Huggies, Kleenex, and Viva.

Ansell will acquire this company's PPE business for US$640 million (A$970 million) in cash. This business includes brands like Kimtech and KleenGuard, as well as glove, mask, apparel and eyewear manufacturing facilities.

Management believes the deal will accelerate the delivery of Ansell's growth strategy, enhancing its global position in attractive and growing segments. It also expects the transaction to generate economies of scale with a focus on combined supply chain and organisational efficiency.

One thing that could be lifting Ansell shares today is management's financial expectations. It expects the acquisition to be mid-to-high single-digit earnings per share accretive pre synergies and low-teens earnings per share accretive including run-rate net cost synergies on a FY 2024 pro forma basis.


Ansell's managing director and CEO, Neil Salmon, revealed that the company has had its eye on this business for some time. He said:

For many years, we have assessed a combination with KCPPE as one of our most attractive acquisition opportunities and I'm delighted that we have now reached agreement with K-C that the optimal path forward for this business is under Ansell ownership.

With this Acquisition we are enhancing our sales of specialist products designed for clean room applications and recorded today under the Life Sciences SBU, while also widening our portfolio of products sold into Scientific verticals which include manufacturing of pharmaceuticals, medical devices and semi-conductors, and laboratories for academic and industrial research.

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 recommended Ansell. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A mature aged man with grey hair and glasses holds a fan of Australian hundred dollar bills up against his mouth and looks skywards with his eyes as though he is thinking what he might do with the cash.
Consumer Staples & Discretionary Shares

Is now the time to buy this high-yielding ASX dividend stock?

This stock could be ripe for an investment.

Read more »

A couple in a supermarket laugh as they discuss which fruits and vegetables to buy
Broker Notes

Why Goldman Sachs just upgraded Coles shares

The broker has become a lot more positive on this supermarket giant.

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

Why this could be the best ASX 200 consumer staples stock to buy in May

Here's why I think this stock is a great buying opportunity in May.

Read more »

A woman has a big smile on her face as she drives her 4WD along the beach.
Share Gainers

Why this $1.5 billion ASX 200 stock just surged 10%

ASX 200 investors are sending the stock surging on Tuesday. But why?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
Consumer Staples & Discretionary Shares

Top fundie says this heavily shorted ASX 200 stock is 'cheaper than it's worth'

Learn here about an ASX 200 stock this Airlie fund manager likes.

Read more »

A laughing woman pushes her friend, who has her arms outstretched, in a supermarket trolley.
Broker Notes

Coles share price holds firm while Woolworths tumbles 18% in 2024. Time to buy?

We canvas the views of a few top brokers on whether Coles shares are a good buy today.

Read more »

Coles Woolworths supermarket warA man and a woman line up to race through a supermaket, indicating rivalry between the mangorsupermarket shares

Which of these ASX 200 shares is the better bargain in May?

Here's my take on Coles vs. Woolies...

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Consumer Staples & Discretionary Shares

This ASX All Ords stock is crashing 20% on a disappointing update

The cost of living crisis is weighing on this retailer's performance.

Read more »