In early September Kimberly-Clark (KMB) announced a definitive agreement to acquire Softex Indonesia for ~$1.2 billion in cash. Softex is a leader in the personal-care products sector in Indonesia – the largest economy in Southeast Asia. The price looks quite reasonable and strategically the acquisition is an obvious plus moving forward. Combined with recent sales growth, KMB’s near 3% yield in a negative real interest rate environment makes the shares attractive.
Softex had sales (primarily diapers) of ~US$420 million in 2019 means the buyout was at a 3x multiple of sales, quite reasonable considering Softex had been growing sales at a double-digit rate. The two companies are an excellent strategic fit given KMB’s entry into Indonesia – at 267 million people, the fourth most populous country on Earth – and the symbiotic fit of Softex’s diapers business with KMB’s line of Huggies, Depends, Pull-ups, and Kotex.
Note the US$420