Australian conglomerate Wesfarmers (ASX: WES)—the company behind Bunnings, Kmart and Priceline—has set its sights on acquiring Silk Laser (ASX: SLA), a leading provider of skin treatment and laser hair removal services, for a whopping $169 million. 

Wesfarmers’ subsidiary, Australian Pharmaceutical Industries (API), has entered into a Transaction Process Deed with SILK Laser Australia Limited in relation to its non-binding, indicative proposal to acquire 100% of SILK’s outstanding shares for $3.15 cash per share by way of a Scheme of Arrangement.

SILK is one of the largest non-surgical aesthetics clinic operators in Australia and New Zealand with a network of over 140 clinics. The acquisition would make the Company part of Wesfarmers’ Health division and complement the division’s existing presence in the sector through its ownership and operation of Clear Skincare Clinics.

Commenting on the news, SILK Founder and Managing Director, Martin Perelman, said, “The SILK Board and leadership team are pleased to announce that we have received a non-binding, indicative proposal from API to acquire 100% of the shares in SILK. 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. The SILK Board has determined that it is in the best interests of shareholders to engage with API.”

Under the terms of the proposal, shareholders would receive total cash consideration of $3.15 per share, which represents a premium of 30.2% to the closing price of $2.42 per share on 19 April 2023, 55.2% to the 30-day volume weighted average price (VWAP) to April 19, 2023, of $2.03 per share, and 67.6% to the 60-day VWAP to 19 April 2023 of $1.88 per share.

The Board has unanimously determined that it is in the best interests of SILK shareholders to allow API to undertake due diligence and negotiation of a binding Scheme Implementation Deed (SID) on an exclusive basis over a period of 30 business days. The exclusivity period could then potentially be extended for a further 10 business days once due diligence is completed. The Board wants SILK shareholders to approve the proposed scheme, and each director plans to vote in favour of it with their shares.

In addition to the proposed acquisition, Wilson Asset Management Group (WAM), one of SILK’s largest institutional shareholders, has thrown its weight behind the Indicative Proposal, entering into a voting agreement with API. 

The proposal is subject to various conditions, including satisfactory completion of due diligence, final Wesfarmers and SILK Board approvals, entry into a SID, obtaining regulatory clearances, no material adverse change, no prescribed occurrences, no material acquisitions/disposals, no dividends/distributions other than the Permitted Dividend, other customary terms and conditions, the approval of SILK shareholders, and Court approval.

Highbury Partnership is acting as financial adviser to SILK, while Kain Lawyers and Wilsons Corporate Finance Limited are acting as legal and co-advisors, respectively. 

If the acquisition goes through, we might just witness Silk Laser join forces with Wesfarmers’ Priceline business and its complementary division Clear Skincare Clinics—is an all-inclusive beauty haven in the making?