No wonder shares in skin and hair care group BWX leapt more than 40% at one stage yesterday after receiving a stunning $800 million-plus buyout offer from two senior executives and US private equity group, Bain.
The offer came late Monday after trading had closed for the day and yesterday the shares surged 43% at $6.30 before closing up 37% at $5.97.
The close was under the $6.10 offer price, suggesting that punters reckon a higher bid won’t be arriving.
BWX was valued at a solid $540 million on Monday and the $270 million premium in the offer is a lot of blue sky.
The offer has come from CEO John Humble and finance director Aaron Finlay who have teamed up with Bain Capital to make an offer of $6.60 cash or a 75% cash plus 25% shares in the newly acquired company.
BWX, which markets the Sukin brand of personal care products, among other brands, came out of Monday’s trading halt yesterday morning and the shares exploded.
Part of that rapid rise was due to short sellers being badly caught and unable to cover their positions as they chased the shares higher.
The shares rose to four month highs.
The Financial Review reported that around 11% of BWX’s shares are held by short sellers, more than double the level (4%) before the half-year results in February when the shares fell from $7.23 to $5 after a weak profit report and forecasts..
The AFR reported that “Investor reaction to the interim results is understood to have prompted Mr Humble and Mr Finlay to approach potential private equity partners about taking the company private."