Shares in protective products group, Ansell jumped to two year highs yesterday after it finally sold its condom business and launched a big share buyback, a deal that has been five months or more in the making.
The shares climbed more than 4.5% to a two year high of $25.26 and closed at $25.18, up 4.3% in the wake of the early morning announcement.
That saw Ansell tell the market of the sale of the ‘Sexual Wellbeing” or condom business to a Chinese consortium for $US600 million ($800 million), and a $US265 million (A356 million) on-market share buyback.
China’s Humanwell Healthcare Group Co and CITIC Capital China Partners bought the business, which also included a lubricant and devices business
"We are delighted with this outcome, following a thorough and competitive process, which realises significant value for Ansell shareholders," Ansell chief executive Magnus Nicolin said in a statement.
The share buyback announced on Thursday represents 10% of shares on issue with the company expecting to receive net after-tax proceeds of $US529 million (A705 million) from the sale.
Ansell said in February that several parties had expressed interest in the business if it was for sale.
Ansell chief executive Magnus Nicolin said the sale would allow the company to focus on its market-leading rubber glove and protective wear business.
“The fact that we can now focus a little bit more narrowly on hand and body protection in both industrial and medical settings will give us a strong platform from which to lead the industry," Mr Nicolin said.
None of Ansell’s sexual wellness products are made in Australia and the division only has 10 people locally in sales and marketing.
The new owners will use the Ansell name for a short period before phasing it out, but will own the Lifestyle, Skyn and other brands.
That will help fund the $356 million on-market share buy back over the next year (which will help support the share price.
Besides the buyback, Chairman Glenn Barnes said Ansell, whose main business is now making gloves for factories and medical applications, would also consider making value accretive acquisitions that could generate attractive returns.
