October 18, 2016 / 9:15 AM / a year ago

Malaysia's Top Glove looks at acquisitions of up to $240 mln

KUALA LUMPUR, Oct 18 (Reuters) - Top Glove Corp Bhd , the world’s largest rubber glove maker, is looking at deals of up to 1 billion ringgit ($240.7 million) as it seeks to expand its business through acquisitions of local players.

The Malaysian manufacturer accounts for about one-fourth of global rubber glove production, with a manufacturing capacity of 46.6 billion pieces per year. Listed in Malaysia and Singapore, the group operates from Malaysia, Thailand and China.

The group is in negotiations with a few local players regarding valuation, said Top Glove Executive Director Lim Cheong Guan, adding that he expected it could come down amid macroeconomic headwinds. He, however, declined to name the companies.

“The deal size could be up to 1 billion ringgit,” he told Reuters on the sidelines of a press conference. “We are looking at niche private players... These could be specialised glove makers.”

He said the group was “in no hurry” seal a deal, although it had previously targeted to clinch it within this year.

The group believes an industry consolidation is on the horizon which will work in its favour to expand through acquisitions.

Chairman Lim Wee Chai said at the conference that the group was cautious about valuation.

“In the United States and Europe, where mergers and acquisitions are common, companies are willing to pay three to four times the price-to-book value. They can compete. Our acquisition must be done smartly, or we would not be able to compete efficiently,” he said.

The group remains committed to organic growth by building factory capacity using the best technologies, he added.

Top Glove is in the process of ramping up capacity in Thailand and locally, in tandem with growing global demand for gloves. By April 2017, the group said it would have a production capacity of 52.4 billion pieces.

The company reported a 36.2 percent drop in its fourth-quarter net profit, and targets a 30 percent global market share by 2020. ($1 = 4.1550 ringgit) (Reporting by Liz Lee; Editing by Subhranshu Sahu)

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