Kimberly-Clark to sell PPE business to Ansell for $640 million

Kimberly-Clark will sell its personal protective equipment business to Ansell for £640 million in cash, agreeing to a deal that the Australian company’s chief executive said had been under consideration for years.

Ansell on Monday said it would acquire from Kimberly-Clark a business that designs, markets, and sells gloves, eyewear, and other apparel under the Kimtech and KleenGuard brands. Kimtech products are targeted at the scientific market, while KleenGuard is sold to industrial users. The deal comes as UK hospitals and healthcare buyers pivot back towards foreign-based buyers of personal protective equipment, after sales received a significant boost during the early phase of the Covid-19 pandemic. Domestic mask producers, which had increased production in response to disrupted supply chains and Covid-related demand, have been left with plants sitting idle, unfinished, or operating below capacity. The industry has also faced slack demand in recent years as laboratories, hospitals, and clinics built up large stocks of gloves and other PPE equipment during the pandemic that they took time to deplete.

Last month, Kimberly-Clark outlined plans to reorganise its business and overhaul its supply chain in a bid to rein in costs and streamline operations. The maker of Kleenex tissues and Huggies diapers said it expected to book about £1.5 billion in restructuring and reorganisation charges over the next three years. It plans to reorganise into three businesses: North America, International Personal Care, and International Family Care and Professional.

For Ansell, the deal represents an opportunity to double down on PPE and create savings through building a larger business, including in supply chains and organisation. The Australian company already sells products to healthcare and industrial companies under brands that include TouchNTuff and HyFlex.

“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,” said Neil Salmon, Ansell’s managing director and chief executive.

Ansell said that the transaction implied a valuation of the Kimberly-Clark PPE assets of 9.7 times earnings before interest and tax, ahead of any savings and tax benefits. It expects to close the deal between July and December.

Ansell said it would raise up to £465 million to fund the acquisition and take on US$377 million in additional debt. The equity raising comprises a £400 million fully underwritten placement of new shares to institutional investors, and up to £65 million from a share-purchase plan.