Australian medical-wear business Ansell (ANN) is about to pay $640 million for the Us- based PPE business Kimberly-Clark (K-C).
The announcement has spurred a price drop for the Ansell stock, which took a 1.97% hit today.
The deal will not go through right away, though, with final details expected to be sorted out by the first quarter of 2025. In order to fund the purchase, Ansell is procuring an institutional placement which is fully funded and will cover $400 million of the purchase price. A new bridge debt facility worth $377 million will help with the purchase, as will a $65 million share purchase plan.
Kimberly-Clark famously owns the Kleenex brand, and their personal protective equipment arm makes gloves, eyewear, and protective clothing for the medical industry.
Ansell’s managing Director Neil Salmon spoke on the purchases, saying that the company was looking to offer a wider range of products and improve sales of specialized items to be used in clean rooms.
The deal requires Kimberly-Clark and Ansell to work together for a period of 12 months at the most, during which time, Kimberly-Clark will support Ansell’s client base with business services.
How Quickly Can Ansell Earn Back the Investment?
Ansell already has an idea as to how profitable the purchase of Kimberly-Clark will be for them. They estimate that they will bring in about $10 million extra per year after three years of working with the company.
The company should make back the purchase price much sooner than that, though, as they rake in an estimated $2.43 billion a year. They are playing the long game with this Kimberly-Clark purchase, though and taking one competitor out to increase their reach and extend their customer base.
As more details about the agreement are settled, we may see Ansell stock gain in the coming weeks. Watch for US inflation data, including the US CPI report to come later this week and move stocks like Ansell.
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