Wesfarmers health subsidiary to acquire Silk Laser Australia for $180m
Wesfarmers (ASX: WES) wholly-owned subsidiary Australian Pharmaceutical Industries (API) has entered into a scheme of arrangement to acquire skin treatment franchise Silk Laser Australia (ASX: SLA).
The acquisition will be priced at $3.35 per share, for an implied equity value of $180 million based on 53.76 million fully diluted shares.
It allows for the payment of a fully-franked dividend of up to a maximum $0.10 per Silk share, with the cash price per share to be reduced by the cash component of any dividends.
Silk clinics are expected to complement API’s existing Clear Skincare Clinic network, providing scale and efficiency benefits through an expanded presence in a growing market for aesthetics products and services.
The deal will provide Silk franchise owners with exposure to a broader healthcare, wellness and beauty network and access to financial support for future growth.
The board of Silk has committed to vote their own shares in favour of the acquisition and has recommended shareholders do the same.
A good fit
Wesfarmers Health managing director Emily Amos said the acquisition of Silk would be a good fit for the API business.
“The due diligence process highlighted strong operational and cultural alignment between our businesses,” she said.
“Should the scheme of arrangement be successful, we look forward to working with the Silk team and franchise partners to support their customers and deliver continued growth.”
EC Healthcare proposal
API’s acquisition offer supersedes a non-binding and indicative takeover proposal for Silk which was received last month by EC Healthcare.
That offer was also priced at $3.35 per share and was recommended by Silk’s board in the absence of a more superior deal.
After discussions with legal adviser Kain Lawyers, financial adviser Highbury Partnership and co-adviser Wilsons Corporate Finance, Silk determined the API binding offer to be a superior proposal to the EC Healthcare’s indicative offer.
A range of factors were taken into consideration including the certainty provided by API’s proposal and the ability to execute a binding scheme of arrangement with API on terms acceptable to Silk.