Asaleo Care has rejected the proposal from Essity to acquire all the shares in the company.
Asaleo Care chairman, Harry Boon, said the proposal fundamentally undervalues Asaleo Care, is materially inadequate and does not reflect the strategic value of the company to Essity.
Essity made a nonbinding indicative proposal to the board of Asaleo Care Limited for the acquisition of additional shares in December.
At the time, Essity, which is largest shareholder of Asaleo, currently holding 36.2 per cent of the shares, proposed a share offer of A$1.26 per share for the remaining 63.8 per cent of Asaleo.
The Essity offer valued the entire company at A$684.3 million ($512.47 million), based on the closing market price A$1.01 on 9 December 2020.
A board committee consisting of the independent directors of Asaleo (excluding the Essity nominated directors) was formed to consider the proposal, including obtaining advice from its financial and legal advisers.
Boon said the committee remains open to further engagement.
In its FY20 trading update, Asaleo Care announced it delivered revenue of $419.2 million (up 2.3 per cent) and underlying EBITDA from continuing businesses of $89.2m (up 6.3 per cent).
Underlying EBITDA, including baby NZ loss, was $87.2 million, ahead of previous guidance at upper end of $84 million – $87 million.
Asaleo Care’s retail segment grew strongly, with feminine care up 12 per cent and incontinence 10 per cent. Consumer tissue in NZ grew 3 per cent, with the branded business up 7 per cent.
In the B2B segment, healthcare incontinence enjoyed growth of 9 per cent whilst revenues from professional hygiene were down only 4 per cent, despite the impact of COVID-19 restrictions on “away from home” activity.
Brand investment was up 11 per cent, which resulted in market share gains in core categories. Strong cashflow was generated and net debt further reduced to $94.9 million. The leverage ratio was reduced to 1.21x from 1.95x in FY19 and 3.25x in FY18.
After selling its Australian consumer tissue business and withdrawing from the baby category in New Zealand, Asaleo Care’s portfolio is now exposed to categories with higher growth potential and stronger economics.
Its acquisition of TOM Organic, announced in December 2020, is expected to be immediately accretive with first full year EBIT expected to be $1.7 million, increasing to $3.5-$4.0 million in the second full year.
For FY21, the company is targeting 5-7 per cent revenue growth. This includes a part-year contribution from TOM Organic and a recovery in professional hygiene, as COVID-19 impacts begin to ease during the second half of the year.
EBITDA is targeted at $90m-$93m with growth moderated by the impact of the final year of absorption of stranded costs from the sale of the Australian consumer tissue business and withdrawal from the baby category in New Zealand, along with rising pulp prices.
For FY22, the company is targeting mid-single digit revenue growth and EBITDA growth of 10 per cent+ benefiting from the abatement of stranded costs and a full year of TOM Organic contribution including synergies.
Sid Takla, CEO and managing director, said the company’s strong performance in an exceptionally challenging FY20 is testament to the resilience of the business and its team.
“Ongoing investment and innovation in our core brands, coupled with strong execution of our plan, enabled us to deliver continued revenue growth and market share gains across our core categories. This has set Asaleo Care on a clear path towards sustainable future growth in FY21 and beyond,” Takla said.
Asaleo Care’s portfolio of brands includes Libra, TENA, Tork, Treasures, Viti and Orchid. The Purex, Sorbent, Handee Ultra and Deeko brands are not owned in Australia.
The company has 15 manufacturing and distribution facilities throughout Australia, New Zealand, and the Pacific Islands.
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