The Blackmores Limited (ASX: BKL) share price has soared 20% after receiving a takeover offer from Kirin Holdings.
Blackmores is a large vitamin company, while Kirin operates in the food and beverage space and owns brands like Kirin, James Squire, XXXX, San Miguel, Hahn, James Boag, Tooheys, Furphy and Little Creatures.
Big takeover offer
Blackmores said it has entered into a takeover agreement with Kirin, where Blackmores shareholders will get $95 cash per Blackmores shares, less any special dvidends declared.
If the takeover agreement goes ahead, the Blackmores board intends to pay a fully franked special dividend of $3.34 per Blackmores share, which will unlock $1.43 of franking credits.
The Blackmores board has unanimously agreed to recommend the takeover to shareholders, suggesting the deal offers appropriate long-term value for the company and an attractive outcome for shareholders.
Blackmores’ largest shareholder, Marcus Blackmore, who owns around 18% of the Blackmores shares on issue at the date of the announcement, has informed Blackmores that he has agreed with Kirin to vote his 3.5 million Blackmores shares in favour of the takeover offer. unless directed otherwise by Kirin.
This offer represents a 23.7% premium to the Blackmores share price yesterday. The offer represents an acquisition multiple of 23.1x the EBITDA (EBITDA explained) generated in the 2022 calendar year.
The takeover is subject to certain conditions, including “informal clearance” by the Australian Competition and Consumer Commission (ACCC) and approval by the Australian Foreign Investment Review Board (FIRB) and the State Administration for Market Regulation (SAMR) of the People’s Republic of China.
What to make of this deal for Blackmores shares
It seems like a strong deal for shareholders, and investors seem to believe it’s going to go ahead because the Blackmores share price is close to $94, so there isn’t much of a gap to the takeover price of $95. I’d be happy to sell if I were a shareholder.
Marcus Blackmore said to the Australian Financial Review that he’s pleased by the culture at Kirin and glad that it’s not private equity:
I got fairly comfortable with them. They’re ethical, they’re strong on culture. Private equity, they would have slashed and gone around sacking people. The company just doesn’t have the resources or the strength. I think Kirin is the best bet.
