Chinese group buys world's No. 2 condom maker for $600 mln

Record ID: 876801

  • Title: Chinese group buys world's No. 2 condom maker for $600 mln
  • Date: 25th May 2017
  • Summary: BEIJING, CHINA (FILE) (REUTERS) VARIOUS OF CHINESE PEOPLE IN SUPERMARKET VARIOUS OF CHINESE PEOPLE IN DEPARTMENT STORE BEIJING, CHINA (FILE) (REUTERS) VARIOUS OF PARENTS SENDING CHILDREN TO KINDERGARTEN VARIOUS OF CHILDREN DOING EXERCISES IN KINDERGARTEN VARIOUS OF CHILDREN DANCING
  • Embargoed: 8th June 2017 15:35
  • Keywords: for $600 mln buys world's No. 2 condom maker Chinese group
  • Location: UNKNOWN
  • City: UNKNOWN
  • Country: China
  • Topics: Company News Markets,Economic Events
  • Reuters ID: LVA0036IC6T1P
  • Aspect Ratio: 16:9
  • Story Text: A Chinese consortium is buying Ansell Ltd.'s condom division, the world's no. 2 condom maker, for $600 million, betting on surging demand in China as sex becomes less of a taboo subject and more emphasis is placed on public health education.
    The Australian firm, which put its oldest but smallest division up for sale last August, said it had reached an all-cash deal with China's Humanwell Healthcare Group Co. Ltd. and CITIC Capital China Partners.
    Ansell's brands include Jissbon, which sounds like James Bond in Chinese, and it is the second-largest maker in China behind Reckitt Benckiser which owns Durex. It also competes with large local brands Donless, Double Butterfly and Gobon.
    Foreign brands tend to have more of a cachet in China after some scandals involving cheap Chinese products.
    For Ansell, however, it made sense to let go of a non-core division that comes with hefty marketing costs to focus on industrial and medical rubber products.
    The company expects to receive net after-tax proceeds of $529 million from the sale, and proceeds will help fund a $265 million share buyback of 10 percent of shares on issue as well as future acquisitions.
    The business sold at nearly 16 times earnings from 2016.
    Shares in Ansell climbed 4 percent on Thursday (May 25), their biggest daily gain in six months, while the broader Australian S&P/ASX 200 index was flat.
    According to a 2016 Transparency Market Research report, China's condom market is seen growing at 12 percent per year in the 2016 to 2024 period, despite the scrapping of the One Child policy - rising from a $1.8 billion market in 2015 to over $5 billion by 2024.
    Ansell said it sees condom sales growth there moderating in the future.
    Humanwell declined to comment and CITIC Capital China partners were not available for immediate comment. Private equity investment into the China health, pharmacy and self-care space has boomed, as investors cash in on rising incomes.
    The transaction is subject to regulatory approval and is expected to complete at the end of September.
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