Ansell acquires glove maker to boost growth

ANN has announced a US$40 million acquisition of South Korean based glove maker Midas.

The company currently generates $30 million in revenue turn over and has market presence across the Japanese and South Korean markets. The acquisition is expected to be FY14 neutral on the EPS line. However, ANN believes the takeover will be ‘meaningful’ over the coming financial years with the acquisition expected to be accretive as of FY15 and ramping up in FY16.

The acquisition is not surprising considering the very muted FY13 results for the HyFlex division that saw organic growth stall. The company saw organic growth of just 1% in HyFlex in FY13 with ANN’s acquisitions programme offsetting this anaemic growth driving revenues up 9%. This compares to sexual wellness that climbed 3% and medical that grew by 4%.

ANN will be hoping Midas has the touch its name alludes to once synergies are reached. The HyFlex glove and plastics division makes up 40% of total EBIT. The decline in HyFlex,  particularly in Asia and Europe, has been concerning for ANN’s and this acquisition follows its current mantra of buying its way out of the flat spots.

With ANN’s sexual wellness and GBU medical products moving in the right direction, although quite sluggishly, acquisitions in this part of the business are also a possibility. Considering the uptake in sexual wellness products in full developed markets ANN would do well to look to Asian and European markets.

We do see FY14 being a stable year for earnings but the methods of deriving this revenue do not look settled and we therefore believe further purchases are on the cards.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.