This article first appeared in The Edge Financial Daily on January 12, 2018

KUALA LUMPUR: Glove-dipping line maker HLT Global Bhd wants to diversify into the rubber glove manufacturing business and has proposed to acquire a controlling stake in a glove maker for RM33 million.

HLT announced yesterday it has inked a heads of agreement (HoA) with Suntel International Co Ltd, Kan Mei Yoong and Lee Sow Yin to acquire 55% in HL Rubber Industries Sdn Bhd (HLRI).

The purchase is to be satisfied via the issuance of 113.79 million new HLT shares at 29 sen apiece — subject to a definitive agreement to be finalised later, said the company.

“As a company, it is only natural that we aim to establish a stronger foothold in the industry and we view this exercise as synergistic and complementary to our existing fabrication business of glove-dipping lines,” HLT executive director Chan Yoke Chun said in a statement.

HLT’s stock exchange filing showed the consideration share price is at a discount of one sen or 3.69% to its volume-weighted average market price (VWAMP) for the five-day period ended on Wednesday of 30.1 sen. It is also at a premium of 13 sen or 81.25% to HLT’s audited net asset per share of 16 sen as at Dec 31, 2016.

HLRI has a share capital of RM10.5 million. The acquisition of HLRI, said HLT, comes with a profit guarantee of a collective RM10 million for the financial years ending Dec 31, 2018 (FY18) and FY19 by the vendors.

HLRI started operations in 2003, and has since established proven track record on delivering quality products and services to its multinational customers under the leadership of Lin Kuo Tang, said HLT.

“On average, the management team of HLRI has over 20 years of experience in marketing, dipping engineering and process technology,” it added.

The filing showed that Lin, who is a director in HLRI, is also currently a director and chief executive officer of Precious Mountain Enterprise Corp groups of companies (PM Gloves), a glove manufacturing conglomerate with production factories in Taiwan, China and Vietnam.

“PM Gloves currently exports its products to more than 100 countries,” said HLT.

Shares in HLT were voluntarily suspended from trading yesterday, and will resume trading today. The counter last closed unchanged at 32 sen, giving it a market capitalisation of RM125.43 million.