Thursday, 8 March 2012

Top Glove eyes acquisition this year

KUALA LUMPUR (March 8): Top Glove Corp Bhd, the world's largest rubber glove maker by volume, aims to buy at least one other glove producer this year as part of its strategy to gain market share and drive earnings, said its chairman and founder.

The Malaysian company is in talks with a number of rubber glove makers, chairman Lim Wee-Chai told Reuters in an interview.

"We are talking to companies mainly from Malaysia. When the pricing and everything is right, we can see something by the end of this year," he said at the company's headquarter in Klang just outside Kuala Lumpur.

Lim said Top Glove is well placed to make acquisitions on the back of its strong net cash position. The company held some 300 million Malaysian ringgit ($99.14 million) net cash as of Feb. 29, 2012, 16.7 percent higher than August a year earlier.

The global rubber glove industry, worth some $4.9 billion, has consolidated over the past decades, from 65 industry players controlling 45 percent of world market share in 2000 to 40 players commanding some 63 percent in 2012, according to the Malaysian Rubber Export Promotion Council.

Last year, private equity firm Navis Capital offered to buy Malaysian rubber glove maker LATEXX PARTNERS BHD [] for 852 million ringgit but the deal fell through due to disagreement on valuation.

YTY Group, the world's second-largest nitrile glove maker, followed up with a proposed 1.25 billion ringgit merger with Latexx but to no avail.

Top Glove is also working on deals to acquire rubber land in Malaysia, Indonesia and Cambodia as it tries to hedge against fluctuations in natural rubber prices, said Lim.

Profit margins for the industry declined in 2011 partly due to higher prices of latex, which makes up some 60 percent of rubber glove makers' production costs.

The latex price peaked at a record 11 ringgit per kg in early mid-February 2011. It plunged briefly in March last year after Japan's tsunami disaster, recovered, and then went on a gradual decline due to the dim global economic outlook.

The price is currently around seven to eight ringgit per kg now, where Lim expects it to stay this year.

"We foresee the global economic slowdown will ease commodity prices, but the Thai government's price support policy may boost prices in the short term," he said.

Top Glove plans to invest about 100 million ringgit this year to increase its production lines and factories, Lim said.

The company operates 20 manufacturing plants based in Malaysia, Thailand and China with a production capacity of 40.05 billion gloves annually. - Reuters

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