A STEP TOWARDS NO.1 GLOBAL SPOT
Top Glove signs term sheet with Adventa Capital to purchase Aspion
TOP Glove Corp Bhd is in talks with Adventa Capital Pte Ltd to buy the latter’s medical gloves business in a cash-and-shares deal, ending weeks of market buzz that included rival Supermax Corp Bhd being the former’s target.
Top Glove said the potential acquisition of Adventa’s unit Aspion Sdn Bhd will establish the company as the world’s largest surgical glovemaker, besides being world’s largest rubber glove manufacturer.
In a filing to Bursa Malaysia yesterday, Top Glove said it had entered into a term sheet with Adventa Capital to buy the entire Aspion shares.
No initial value of the deal was disclosed but Reuters calculations showed that the purchase consideration of between RM1.28 billion and RM1.44 billion.
The takeover rumours began in the middle of last month when executive chairman Tan Sri Dr Lim Wee Chai said at Top Glove’s fourth quarter results briefing that it would be buying a rubber glove manufacturer costing more than RM1 billion.
Top Glove said among the terms agreed included Aspion’s target of a net profit of at least RM80 million in the fiscal year ending October 31 2018.
If it failed to hit that target, Advental Capital would reimburse any shortfall arising from that figure.
It said the indicative purchase consideration would be based on Aspion’s net profit target of at least RM80 million for financial year 2108, and contemplated price-to-earnings multiple of 16 to 18 times of the
The combined capabilities within the enlarged group will support sustainable and higher growth and profitability in a fast-growing global healthcare industry.
TAN SRI DR LIM WEE CHAI Top Glove Corp Bhd executive chairman
target profit.
In the Bursa Malaysia statement, Lim said the proposed acquisition was well-aligned with Top Glove’s strategy of growth and product diversification.
“The combined capabilities within the enlarged group will also support sustainable and higher growth and profitability in a fast-growing global healthcare industry,” he said.
The global market value for surgical gloves was estimated at US$1.4 billion (RM5.77 billion) in 2015.
It was likely to expand by compounded annual growth rate (CAGR) of nine per cent while current demand of two billion pairs was expected to grow to three billion pairs at a CAGR of eight per cent by 2020.
Growth was expected to be driven by developed regions, including North America, Europe, and parts of Asia Pacific and Middle East, said Top Glove.
The company accounted for about one-fourth of global rubber glove production, with a manufacturing capacity of 51.9 billion pieces per year from its 33 factories in three countries, including 28 in Malaysia.