Latexx’s due diligence on YTY almost over

KUALA LUMPUR – Latexx Partners Bhd is poised to complete a due diligence on YTY Industry Holdings Sdn Bhd by as early as next month, says chief executive officer Low Bok Tek.

“It should be completed by the end of this month or early August,” he told Business Times in a telephone interview.

Latexx is proposing to take over YTY for RM1.25 billion by paying 30 per cent in cash, with the balance of the assets being swapped for Latexx shares.

The deal, if goes through, will be the first takeover of a rival glove maker in four years.

In 2007, Top Glove Corp Bhd bought Singapore-listed rubber glove manufacturer Mediflex Ltd for S$21 million (RM51.5 million).

In recent months, there had been heavy speculation of smaller glove makers being gobbled up by bigger rivals.

But to date, despite much hype, none of the so-called consolidation exercise had taken place.

Talk included that of Adventa Bhd being an acquisition target of a healthcare firm based in the US and fund manager Navis Asia Management offering RM852 million to buy Latexx.

This time, however, Latexx’s top executives are optimistic about the YTY takeover.

Although privately-held, YTY is not a small player. It is able to churn out 6.5 billion pieces of rubber gloves per year.

Should the YTY takeover proceed as planned, the enlarged Latexx is expected to have a combined installed capacity of 15.5 billion pieces a year, of which 11 billion will be of the nitrile variant.

“If the merger succeeds, we’ll be the biggest nitrile glove maker,” Latexx head of corporate services Dr Liew Lai Lai said in a separate interview.

Currently, the world’s number one synthetic rubber, or nitrile glover maker, is Hartalega Holdings Bhd, with annual installed capacity of eight billion pieces.

Latexx has just completed its capacity expansion to nine billion pieces of gloves a year and is preparing for the next phase.

Liew said: “The capital expenditure for our next phase of expansion of three billion pieces is about RM70 million.”

Today, the world’s top three glove makers by installed capacity are Top Glove Corp Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd.

Upon completion of Latexx’s merger with YTY, Latexx’s is set to nudge Kossan to the fourth place.

Asked on Latexx’s outlook for the year, Lai replied: “We should be doing slightly better this year. We’re producing more gloves and the selling prices are still holding up.”


Source: Business Times