B(ye)WX:AX

This week, BWX.AX came back from a  trading halt surging at a 3-month high of 6.30 after the company announced a "unsolicited preliminary, non-binding indicative conditional offer".

The share fell from low $7s to $5s after the release of half year results and acquisition spree aren't going as expected. The reaction seem to have prompted Finance Director, Aaron Finlay, CEO, John Humble to take the company private. Over the last 3 months, Bain Capital agreed to back the $860 million bid. Under the proposed scheme, investors would have the option to receive $6.60 per share of a combination of 75% shares and 25% cash in a new unlisted company.

I acquired BWX shares back in February after the release of the half year results ending December as I saw a huge potential in the company. Seeing as they:

1. Acquired 3 companies in the past year, and all really good companies with well-demanded products. Natural skincare is getting more attention in the beauty world due to being "gentler" on skin and sulfates are a huge no-no.

2. EBITDA or operating income before tax, depreciation and amortization increased by 30%! In hindsight, I should have questioned if it was sustainable. Nonetheless, it is impressive, and this was mainly due to growth in Sukin. Improved manufacturing, lesser price discounting and increase in exports definitely played a huge role.

3. Its a stock of great value. I traded when it was in its high $5s (regretting it slightly now that it had been in the $4s the past month). Its a relatively healthy dividend stock. Its competitors includes TIL.AX but BWX is more diversified having targeted consumers in Australia and the States, not to mention upcoming distribution in China.

I am bummed that they decide to go private as what the company is probably going through is an indigestion, but I can agree that they definitely grew too much last year and would need to take time off to "restructure". I will continue to hold their shares as I am confident in the company's direction.

Disclosure: I am long on BWX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it . I have no business relationship with any company whose stock is mentioned in this article.