Photo: Pastel Gloves
Enviro-Hub Holdings, on May 19, has acquired the remaining 75% stake it does not own in Pastel Glove Sdn. Bhd. for a consideration of $46.8 million in a 50:50 cash and share transaction.
Under the term sheet, Enviro-Hub will pay a cash consideration of $23.4 million and further issue 292.5 million new shares at a pre-determined issue price of 8 centsper share for a total subscription price of $23.4 million.
Following the acquisition, Pastel Gloves will become a fully-owned subsidiary under Enviro-Hub.
Enviro-Hub, on Jan 12, acquired a 25% stake in Pastel Glove for US$5 million ($6.7 million) through a conditional subscription and loan agreement.
In February, Pastel Gloves installed and commissioned its first automated glove-dipping line – a single former glove-dipping line – with a production capacity of 132 million gloves per annum.
According to Enviro-Hub, the group has been looking to expand its glove-making capacity, with the addition of one production line (all double former glove-dipping lines) every month from March onwards.
A total of six production lines with an expected production capacity of 1.42 billion gloves per annum are projected to be operational by September, with further plans for expansion.
Pastel Gloves has already identified land for its new facility.
Pastel Gloves’ founders, Law Siau Woei and Choo Kuan Ping will remain in charge of the company following the acquisition.
The founders come with over 20 years of experience in the gloves trading and manufacturing industry.
Once the deal is completed, Law will become the second-largest shareholder in Enviro-Hub.
According to Hong Leong Investment Bank, demand for rubber gloves is expected to remain elevated with their increased usage in vaccination programmes around the world, which will help to keep average selling prices (ASPs) high.
“The Covid-19 pandemic has resulted in an unprecedented increase in the demand for gloves and Personal Protective Equipment (PPE), due to the increasing usage of gloves to protect healthcare professionals, and the heightened hygiene standards at Food and Beverages (F&B) establishments, hospitality, and travel sectors. The recent resurgence in global Covid-19 cases and supply shortage in the US will continue to support elevated ASPs for gloves, which bodes well for glove makers,” says Adrian Toh, Enviro-Hub’s chief investment officer.
“Once the deal is completed, the group will have absolute control of the lucrative glove operation of Pastel Gloves which will not only generate a strong bottom-line but also positive cash flow. The cash flow will help the Group expand its new healthcare products business line. The management team from Pastel Gloveshas a wealth of experience in the PPE business and they are committed to growing the healthcare products business division in Enviro-Hub rather than just focusing on Pastel Gloves Their know-how in sophisticated clean room and medical gloves set-up will aid our expansion efforts by way of acquisition and/or organic growth in our healthcare products business line,” says Raymond Ng, executive chairman of Enviro-Hub.
“Going forward our focus will be on PPE products such as latex and nitrile gloves for medical and industrial use. We will also focus on medicine, medical consumables, and other healthcare-related products,” Ng adds.
Shares in Enviro-Hub last closed flat at 8.5 cents on May 18 before its trading halt before market open on May 19.
