This article first appeared in The Edge Financial Daily on October 25, 2017
KUALA LUMPUR: Shares in Top Glove Corp Bhd, Adventa Bhd and Supermax Corp Bhd plunged yesterday after Top Glove said it was not acquiring its two smaller rivals.
Top Glove shares tumbled as much as 5.2% to its intraday low of RM6.33 before closing at RM6.39, with 1.96 million shares done. Over the course of a day, around RM340 million had been wiped off Top Glove’s market capitalisation.
The world’s largest rubber glove manufacturer told Bursa Malaysia yesterday that its board of directors is constantly evaluating merger and acquisition opportunities as part of its business expansion strategy. However, it said it is not acquiring Adventa or Supermax.
“Top Glove is currently in negotiations to acquire a glove manufacturer, the terms and conditions of which have not been finalised at this juncture,” it added.
Top Glove said further details of the proposed transaction will be announced to Bursa in compliance with the requirements of the Main Market of Bursa once a definitive agreement has been entered into.
Shares in Top Glove and Supermax have been rising amid speculation over Top Glove’s potential acquisition target after its executive chairman Tan Sri Lim Wee Chai told pressmen last week the group is set to announce a major acquisition soon that could cost more than a billion ringgit. On Monday, Top Glove’s closing price hit a 21-month high of RM6.68, while Supermax shares settled up 4.62% at RM2.04, its highest level since June 8.
However, The Edge Financial Daily reported yesterday, citing two sources, that a privately held surgical glove manufacturing operation of Adventa could be a likely acquisition target for Top Glove, which is said to be looking for a surgical glove company.
The report stated that Adventa in 2012 transferred its glove business to Aspion Sdn Bhd, which is a private vehicle of Adventa managing director Low Chin Guan, for RM320.85 million.
Adventa’s share price had shot up by as much as 27.4% or 20 sen to an intraday high of 93 sen on Monday. Along with Top Glove, Adventa shares, however, pared some gains to close 9.58% or eight sen lower at 75.5 sen yesterday after Top Glove’s announcement. The stock saw 11.11 million shares change hands. It lost RM11.5 million in market value in a single day.
In a separate filing with Bursa yesterday, Adventa said it is no longer involved in surgical glove manufacturing operations.
“Adventa undertook a restructuring exercise in 2012, whereby the company on July 25, 2012, accepted the offer letter from Aspion to dispose of all of the surgical glove businesses and undertakings, including the liabilities and assets of Adventa other than the excluded business.
“The excluded business means all the shares in the capital of Sun Healthcare (M) Sdn Bhd and Electron Beam Sdn Bhd. The disposal was approved by shareholders on Nov 1, 2012, and was completed on Nov 30, 2012,” it added.
Supermax also suffered a sharp sell-off yesterday, falling 7.35% or 15 sen to close at RM1.89, wiping off RM99.4 million in value in one day with 7.26 million shares done.
In a separate filing, Supermax said it is untrue and misleading that it is looking to dispose of its assets at a premium to Top Glove.
“No discussion was held between the company and Top Glove on this matter. Supermax has no involvement with the issuance of the news article,” added Supermax.
Last Thursday, Nikkei Markets, quoting a dealer, reported that the closest glove maker which meets the criteria and could sell its glove unit could be Supermax. The report also said the market is speculating that Supermax may dispose of its assets at a premium.