After 112-years of Australian ownership Ansell will sell its condom business to a Chinese consortium for $800 million.
Ansell says the time is right to exit the fluctuating sexual wellness market and focus on rubber gloves.
Ansell’s history dates back to 1905, when Eric Norman Ansell bought a condom machine from his employer, the Dunlop Pneumatic Tyre Company of Australasia, and started his own business.
The Ansell company expanded into rubber products, including surgical and industrial gloves, before Dunlop bought it in 1969 to form the Ansell Rubber company.
Under the deal announced on Thursday, Humanwell Healthcare Group and CITIC Capital China Partners will buy the division that makes condoms and personal lubricants, which was founded in Melbourne in 1905.
Ansell chief executive Magnus Nicolin said the sale would allow the company to focus on its market-leading rubber glove and protective wear business.
While historically well known for its condoms, sexual health products generated just 14 per cent of Ansell’s revenue in the first half of the 2016/17 financial year.
“The fact that we can now focus a little bit more narrowly on hand and body protection in both industrial and medical settings will give us a strong platform from which to lead the industry,” Mr Nicolin said.
He said the global condom market was in flux, making it the right time to off load the condom business.
There was little condom sales volume growth in developed markets like Australia, North America and Europe, Mr Mangus said, which had forced Ansell to push customers towards premium products like its Skyn range.
He said emerging markets like China and Latin America were growing rapidly, at 9 per cent in the last half, but were heading for moderation.
“So we felt that timing was not half bad when it comes to industry dynamics,” Mr Nicolin said.
None of Ansell’s sexual wellness products are made in Australia and the division employs about 10 people locally in sales and marketing. Mr Nicolin said he did not expect the new owners to reduce the workforce.
The new owners will use the Ansell name for a short period before phasing it out, but will own the Lifestyle, Skyn and other brands.
Ansell expects to net after tax proceeds from the sale of $705 million.
That will help fund a $356 million on-market share buy back over the next 12 months, announced on Thursday. The buy-back represents 10 per cent of issued shares.
Ansell has factories and businesss worldwide, reporting $2.1 billion in sales last year. It ASX-listed shares were up 3.9 per cent to $25.08 at lunchtime.