SYDNEY, AUSTRALIA: Ansell Limited (ASX:ANN) has signed an agreement for the acquisition of Kimberly-Clark Corporation’s Personal Protective Equipment (PPE) business for a cash consideration of $640 million.

The acquisition encompasses the entirety of the assets within Kimberly-Clark’s PPE division, known for its innovative hand, body, and eye protection products marketed under the Kimtech™ and KleenGuard™ brands.

The transaction is poised to accelerate Ansell’s growth strategy, particularly strengthening its foothold in the Scientific and Industrial segments.

Financially, the deal implies an EV/EBIT multiple of 9.7x, which is expected to decrease to 7.8x after accounting for anticipated cost synergies and tax benefits.

Ansell forecasts approximately $10 million per annum in net cost synergies by the third year of ownership and an estimated $50 million in tax benefits from the amortization of U.S. goodwill.

To fund the acquisition, Ansell has secured a $400 million institutional placement and $377 million in new debt, alongside a Share Purchase Plan targeting up to $65 million.

This comprehensive funding strategy is projected to result in a leverage ratio of 2.3x pro forma CY23 EBITDA, with plans to reduce leverage below 2.0x within a year post-acquisition.

The completion of the acquisition is anticipated in the first quarter of FY25, contingent upon regulatory approvals and customary closing conditions.

Despite the significant financial undertaking, Ansell’s FY24 Adjusted EPS guidance remains unchanged, with the placement expected to marginally reduce EPS by 1¢ to 2¢.

This acquisition marks a significant expansion for Ansell into the PPE market, promising to deliver value through enhanced scale, efficiency, and a stronger competitive edge.

Commenting on the Acquisition, Managing Director and CEO Neil Salmon 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.”

“The KimtechTM and KleenGuardTM brands we are acquiring and the experienced KCPPE business team behind them have strong reputations for quality and innovation built over many years of industry leadership. These are similar qualities to Ansell, however, KCPPE has particular areas of strength across product portfolio, geographic position, and sustainability differentiation that will meaningfully enhance Ansell’s overall position in the marketplace and customer differentiation.”

“Our existing footprint, in addition to our global organisation and supply chain, creates the opportunity to generate significant synergy value from the acquisition while also enhancing our combined organic growth potential.”

“And we are excited about the benefits this will create for Ansell’s customers and shareholders.”