Ansell turns to UBS for its deal of the decade

The acquisition of protective glove maker BarrierSafe Solutions is the Australian company’s biggest acquisition since 2002.

For about a decade and over the tenure of three chief executives, investment bankers have been calling on Ansell hoping their largely casual chats on strategy and finance would one day translate into a big deal.

These so-called coverage bankers had ploughed a fallow field until today.

Ansell chief executive Magnus Nicolin has turned to UBS AG to advise and finance the company’s $US615 million ($671.6 million) acquisition of protective glove maker BarrierSafe Solutions International Inc.

Two years ago Odyssey Investment Partners LLC beat out Ansell to acquire BarrierSafe. But like other private equity firms, the competition with Ansell for the deal gave Odyssey confidence it had a ready buyer when it wanted to sell.

Ansell has bought BarrierSafe at the equivalent to enterprise value divided by earnings before interest, depreciation and amortisation of 9.7 times based on October 2013, 12-month figures – or 8.4 times post-synergies.

“Value-added acquisitions has been very important to Ansell,” Nicolin said during a conference call today. “We have tended to be very picky.”

Since July 2011, Ansell has made four acquisitions: US medical products and services company Sandel for $US13.5 million, European glove company Comasec for $118 million, Brazilian protective clothing company Hercules for $US77 million and South Korean glove manufacturer Midas for $US41.1 million.

Nicolin and his chief financial officer Neil Salmon have largely put their trust in an internal deal team for these smaller, strategic, bolt-on acquisitions.

But for Ansell’s biggest acquisition since 2002, the year it changed its name from Pacific Dunlop, Nicolin and Salmon turned to UBS.

Ansell’s BarrierSafe purchase involved not only UBS’ long-term Ansell coverage banker managing director Quentin Miller but his US and Australian colleagues, who advise on mergers and acquisitions, as well as debt and equity capital market teams.

UBS has provided a $US300 million bridge facility to Ansell that will be taken out with long-term debt in the first half of next year. The investment bank is also underwriting a $338 million share sale to investors and a share purchase plan of as much as $100 million.

Transactions costs associated with M&A advisory, bridge finance, equity capital markets underwriting, legal and accounting fees as well as other ancillary costs are estimated at $US16 million.

The financing will also give Ansell another $US69 million for smaller bolt-on acquisitions.

There may be more work for UBS to come.