Ansell Ltd (ASX: ANN) shares are in focus today after the company announced it finalised a major acquisition.
The purchase was made for all of the assets in US-listed entity Kimberly-Clark Corporation (NYSE: KMB)'s personal protective equipment (PPE) business – a deal Ansell initially announced on 8 April 2024.
Despite the completion of this major acquisition, Ansell shares remain steady at $25.90 per share at the time of writing, flat with the previous close of $25.91 apiece. Here's a closer look.
Ansell shares on radar after transaction
Kimberly-Clark is a US consumer goods giant, holding over 175 brands under its banner. Many are household names – Kleenex tissues and Huggies diapers are two examples.
It has a market capitalisation of US$47.8 billion at the time of writing.
The rationale behind the deal was to expand Ansell's product portfolio and market position. The $970 million transaction will see it acquire brands like Kimtech and KleenGuard – both used for anti-contamination against bacteria and viruses.
It also includes several manufacturing assets used in the production of gloves, masks, apparel, and eyewear.
Financial implications
The deal was finalised today after Ansell secured long-term debt financing to settle the balance.
It raised US$377 million via the United States Private Placement (USPP) market. The other portion of the deal was funded through a fully underwritten institutional placement of approximately 17.8 million new Ansell shares on 8 April, where it raised $400 million at $22.45 per share.
Since that date, these investors have made a 15% return on their money as I write.
The new debt facility announced today will replace previous instruments Ansell was using to fund its growth. As such, management noted this should provide Ansell with financial stability going into FY 2025:
The USPP proceeds replace the previously announced fully committed bridge facility which will no longer need to be drawn, with maturities on the notes issued ranging from 5 to 12 years and providing Ansell with long term funding certainty going into FY25.
Outlook for Ansell shares
Despite the size and potential impact of the acquisition, Ansell shares have not seen immediate movement in early trade on Tuesday.
Investors might be taking a wait-and-see approach, considering the complexities and integration efforts associated with such a significant purchase.
But analysts appear to be optimistic about the deal's long-term benefits. According to CommSec, Anshell shares are rated as a moderate buy, with 6 buy and 6 hold recommendations, respectively.
Ansell's management also expects the acquisition to be beneficial. It expects revenues and earnings per share (EPS) to grow directly as a result of the move. We will just have to wait and see if this is positive for Ansell shares or not.
The company's full-year results for FY 2024 are set to be released on 20 August, per the announcement.
In the last 12 months, Ansell shares have slipped over 4.5% into the red. This year to date, the stock has lifted into the green following a 6% return in the past month of trade.
