Top Glove said to buy Adventa’s surgical glove operations

This article first appeared in The Edge Financial Daily, on October 24, 2017.
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KUALA LUMPUR: Top Glove Corp Bhd is said to be acquiring the privately held surgical glove operations of Adventa Bhd, according to two industry sources.

“It is possible that Adventa’s surgical glove operations under the Terang Nusa group, which manufactures and distributes surgical and medical gloves, could be a likely acquisition target for Top Glove which is said to be looking for a surgical glove company,” one source told The Edge Financial Daily.

Adventa’s share price shot up by as much as 20 sen or 27.4% to 93 sen yesterday, before closing at 83.5 sen.

Adventa in 2012 transferred its gloves business to Aspion Sdn Bhd — a vehicle of Adventa managing director Low Chin Guan — for RM320.85 million. Since then, the group has focused on medical services to hospitals, institutions, clinical centres, and to patients directly, distributing medical and healthcare equipment and providing home dialysis products.

According to a company search, Aspion fully owns four glove firms, namely Terang Nusa (M) Sdn Bhd (manufacturer and distributor of surgical and medical gloves), Purnabina Sdn Bhd (manufacturer and distributor of medical gloves), Adventa Health Sdn Bhd (distributor of medical gloves) and Sentienx Sdn Bhd (manufacturer and distributor of medical gloves).

For the financial year ended Oct 31, 2016 (FY16), Terang Nusa reported a net loss of RM27 million, compared to a net profit of RM4.81 million in FY15. Revenue fell 3.5% to RM227.64 million.

Speculation has been rife on the potential acquisition target for Top Glove after its executive chairman Tan Sri Lim Wee Chai told pressmen last week that the group is set to announce a major acquisition soon that could cost more than a billion ringgit.

Lim said the acquisition target would be a Malaysian company that produces both surgical and examination gloves. According to Top Glove’s 2016 annual report, surgical gloves only make up 2% of the group’s product mix.

Last week, Nikkei Markets, quoting a dealer, reported that the closest glove maker which meets the criteria and could sell its glove unit is Supermax Corp Bhd. The report said that the market is speculating that Supermax may dispose of its assets at a premium.

Supermax’s share price closed up nine sen or 4.62% at RM2.04 yesterday, its highest level since June 8 when it closed at RM2.05.

However, another industry source opined that it is unlikely that Supermax would be disposing of its glove business to Top Glove.

“Supermax’s market capitalisation of RM1.35 billion, which is around the acquisition figure mentioned by Top Glove, could be the reason for the speculation, but I don’t think this is likely as both companies have differing leadership styles,” said the second source.

Top Glove’s shares price, which has appreciated as much as 18% in the last two weeks from its closing price of RM5.65 on Oct 10, hit a 21-month high of RM6.68 yesterday.

Top Glove could not be reached for comment for this article.