Saturday September 15, 2012
Merger and acquisition on the agenda
While organic growth will allow Top Glove Corp Bhd to achieve its targets, the process can be expedited and made easier if it buys over another glove firm to increase its production capacity and market reach.
With RM300mil in net cash and experience in merger and acquisition (M&A) the company, which made some RM53mil in net profit in its latest quarter is certainly in a good position to buy other companies.
And this is precisely what it is doing.
Fresh from announcing its purchase of Malacca-based GMP Medicare Sdn Bhd, a producer of medical and examination gloves, Top Glove is now in talks with one of the nine largest glove makers in the country.
“We are still in discussions,” chairman Tan Sri Lim Wee Chai says, stopping short of revealing more.
He hopes to conclude the deal in a year.
Speaking of past M&A experiences, Lim admitted it took longer than expected to turn around loss-making Singapore-listed Medi-Flex Ltd which returned to the black two years ago.
Top Glove had bought Medi-Flex in February 2007 for RM49mil and expected to turn it around six months after that.
Medi-Flex makes gloves for the clean room industry and the onset of the global financial crisis affected demand for clean room gloves which are closely tied to the state of economies, an analyst points out.
Legal issues in Medi-Flex also took longer-than-expected to resolve, says the analyst.
Still, the reversal of fortunes finally happened in 2010 and for the first nine months up to May 31, Medi-Flex posted a net profit of RM4mil.
Top Glove wants to source for its own latex
Lim plans to live healthily and happily to 100 years old
Top Glove eyes Asian markets for expansion
Discipline, good hygiene and a slim body can do wonders