Key Takeaways
- Kimberly-Clark shares are in focus Monday following news that the company has agreed to sell its PPE business to Australian-based Ansell for $640 million.
- The deal comes several weeks after the company announced that it is reorganizing into three businesses to improve its supply chain and reduce costs.
- Investors should monitor the key $124.50 level, an area on the chart where the price finds support from both the top trendline of a channel and the 200-day moving average.
Kimberly-Clark (KMB) shares are in focus on Monday after Australian-based Ansell (ANSLY) said it has entered into a binding agreement to acquire the company’s personal protective equipment (PPE) business for $640 million.
Kimberly-Clark’s PPE business designs and markets gloves, safety eyewear and protective apparel under the Kimtech and KleenGuard brands that target scientific and industrial end markets, making it a strategic fit for Ansell, which sells a range of products to healthcare and industrial companies through brands including 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,” Ansell managing director and CEO Neil Salmon said in a statement announcing the acquisition.
Ansell, which expects the deal to close in the second half of the year, said the transaction places an implied valuation of Kimberly-Clark’s PPE assets at 9.7 times earnings before interest and tax (EBIT), without taking savings and tax benefits into consideration, The Wall Street Journal reported.
The transaction comes several weeks after Irving, Texas-based Kimberly-Clark unveiled a $1.5 billion restructuring plan to reorganize into three businesses with the intention of revamping its supply chain and reducing costs amid a reduction in consumer spending and increasing competition from cheaper private labels. The company’s three new divisions will include North America, International Personal Care, and International Family Care and Professional.
After bottoming out in October last year, the Kimberly-Clark share price remained rangebound within a channel for five months before breaking to the upside in early March.
Investors should keep a close eye on the key $124.50 level, an area on the chart where the price finds support from both the channel’s upper trendline and the 200-day moving average. A hold of this region could give buyers the confidence to make a run towards higher overhead resistance around $138.50, while a breakdown back into the channel could see a retest the pattern’s lower trendline located at $117.65.
Kimberly-Clark shares were up 0.3% at $126.68 about three hours before Monday’s opening bell.
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