The Asaleo Care Ltd (ASX: AHY) share price was on fire this morning, rising 21.78% to $1.23 before being placed in a trading halt. Asaleo shares opened at $1.01 this morning and stayed pretty much at that level until just past 11:00 am.
Then, they shot the moon and rapidly climbed as high as $1.24. At 11:31 am, Asaleo released an announcement to the markets which informed investors that trading would be “temporarily paused pending a further announcement”.
At 12:32 pm, the ASX issued another announcement advising the markets the shares would be “placed in a trading halt at the request of AHY [Asaleo Care], pending it releasing an announcement.” We have not yet received this announcement directly from Asaleo.
So what’s going on here with Asaleo Care? This company is a large manufacturer of personal paper products. It owns well-known household brands like Libra, Sorbent, Handee and Purex.
What’s driving the Asaleo Care share price?
Well, the recent run of ASX takeovers looks set to add another chapter to its story today. Asaleo is reportedly the latest ASX company to be subject to a takeover offer. This follows in the footsteps of other recent targets such as Coca-Cola Amatil Ltd (ASX: CCL).
According to reporting in the Australian Financial Review (AFR) today, Asaleo’s board has “called in defence adviser Luminis Partners to assess and handle potential interest in the company”. The AFR asserts that “it is understood there’s an indicative proposal on the table at $1.26 a share, which would be a 24 per cent premium to Asaleo’s last traded price”.
The suitor? According to the report, it is “believed to be” an existing major shareholder in Asaleo – Essity Group. Essity is a large Swedish company, and already reportedly has a 36.2% stake in Asaleo.
However, the report also states that “market sources reckon that’s unlikely to be enough to win over Asaleo’s board and shareholders”.
Even so, the two companies are apparently already rather intertwined, especially if we consider the large stake that Essity already has in Asaleo. The AFR tells us that Essity already licenses several brands to Asaleo, including ‘Tork’ and ‘Tena’ until 2027. These two brands alone reportedly made up “the majority” of Asaleo’s earnings last financial year.
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More reading
- Why Asaleo Care, Fortescue, Perpetual, & Starpharma shares are storming higher
- Leading ASX fund manager names 3 US value stocks to buy in December
- Meet the latest ASX stock to come under the takeover spotlight
- Can these fund managers drive the Coca-Cola Amatil (ASX:CCL) share price 10% higher?
- BlueScope (ASX:BSL) share price on watch as takeover rumours swirl
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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