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TROP (5401): TROPICANA CORP BHD buys RM78.47m worth of Top Glove shares

KUALA LUMPUR (Dec 3): Tropicana Corp Bhd, in which tycoon Tan Sri Lim Wee Chai is the chairman and major shareholder, has bought RM78.47 million worth of Top Glove Corp Bhd's shares.

Lim, who holds an 11.07% stake in Tropicana, is also the chairman and founder of Top Glove, where he controls 25.68%.

In a stock exchange filing, Tropicana said it had bought 11.25 million Top Glove shares "at prevailing market prices from the open market", via its indirect wholly-owned Desiran Reality Sdn Bhd. The acquisitions were funded using internal funds, it said.

Based on a back-of-the-envelope calculation, the property developer paid an average of RM6.97 per share for the lot, which represents a 0.14% stake in the rubber glove maker.

Tropicana said the acquisition will allow it to capitalise on the glove maker, which has favourable long-term prospects amid the increased global demand for its products. “The acquisition can allow Tropicana to benefit from the prospects of the manufacturing and trading of gloves which is largely contributed by the increased demand globally for gloves due to the ongoing Covid-19 pandemic and also the growth in the global healthcare services industry,” it said.

Tropicana said none of its directors, major shareholders or persons connected with them have any direct or indirect interest in the acquisition. It also said Lim had voluntarily abstained from deliberating and voting for the acquisition.  

"The board, save for Tan Sri Dr Lim Wee Chai after having considered all aspects of the proposed acquisitions, is of the opinion that the proposed acquisitions are in the best interests of Tropicana," it added.

Shares of Top Glove, whose subsidiaries are being investigated by the Government over worker housing issues, have been under pressure recently.

On top of news of vaccine discovery, which has weighed on the stock, a surge of Covid-19 infections among its workers that resulted in the temporary closure of 28 of its factories — representing about half its production capacity — has also been a drag on the counter.

In addition, the spike of infections has led to investigations by the Human Resources Ministry into six of its subsidiaries, which found that they housed their workers in congested and uncomfortable accommodations that lacked proper ventilation. This, the Ministry said on Tuesday, was a breach of the minimum standards for workers housing and amenities, as provided for under the law.

To staunch the decline of its share price, Top Glove has been on a share buyback spree. Since September, it has forked out RM1.28 billion for the exercise, after spending RM69.94 million more yesterday. The total is equivalent to about 68% of the RM1.87 billion net profit it made for the financial year ended Aug 31, 2020.

Top Glove shares, which has retreated 20.9% since end-October, settled at RM6.78 today, up 10 sen or 1.5% from yesterday's close. This gives the glove maker a market capitalisation of RM55.57 billion. Year to date, the stock is still up over 300%.


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