Wesfarmers’ API offers $169m to acquire SILK Laser Australia

Wesfarmers’ API offers $169m to acquire SILK Laser Australia

SILK Laser Australia (ASX: SLA) has opened its books to conglomerate Wesfarmers (ASX: WES) for due diligence as part of a potential takeover that could see the Adelaide-based personal care chain acquired for $169 million.

The $3.15 per share offer was pitched by Wesfarmers’ wholly-owned Australian Pharmaceutical Industries (API), the owner of pharmacy chain Priceline, and reflects a 30.2 per cent premium to SILK’s closing price of $2.42 on 19 April.

Owning around 9.3 per cent of SILK’s outstanding shares is Wilson Asset Management Group (WAM), which has also agreed to back the deal in the absence of a better offer.

The SILK board of directors has also confirmed to API that it intends to unanimously recommend the deal if no better offer is put forward and an independent expert concludes the takeover is in the best interest of shareholders.

SILK Laser Australia has given API 30 business days to undertake exclusive due diligence, which could potentially be extended for a further 10 days.

“SILK has grown from a single store in South Australia, to listing on the ASX a few short years ago, growing the network to more than 140 stores today,” SILK founder and managing director Martin Perelman said.

“The SILK board has determined that it is in the best interests of shareholders to engage with API.”

Operating 142 clinics across Australia, SILK Laser Australia also owns brands Australian Skin Clinics (ASC), The Cosmetic Clinic (TCC), Unique Laser and Eden Laser Clinics – a company that was purchased four months ago for $8.4 million.

SILK has grown its injecting team from roughly 200 to 250 nurses, making it one of the largest specialist non-surgical clinic groups in the Australia and New Zealand (ANZ) region. 

In the December half, the Adelaide-based skincare chain outpaced some of its competitors, with revenue and profit both growing by over 20 per cent to hit $49 million and $5 million respectively.

SILK’s network cash sales reached $102.8 million, reflecting a 35 per cent rise as the group’s distribution sales - comprising brands SILK Skincare and Aesthetics Rx - surged by 65 per cent to generate $13.4 million.

Strong sales in NSW and Victoria also led to franchise fees growing by 50 per cent to $9.1 million.  

If the takeover from API is successful, SILK will join an existing health division that currently includes skincare, cosmetic injecting and laser hair removal service Clear Skincare Clinics. Founded in 1999, the Sydney-based company has more than 90 locations across ANZ.

Wesfarmers privatised API last year after successfully acquiring the company - which had also received offers from Sigma Healthcare (ASX: SIG) and Woolworths Group (ASX: WOW) - for $764 million.

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