KUALA LUMPUR: AT Systematization Bhd (ATS) is buying Pearl Glove (Malaysia) Sdn Bhd which has a contract to produce around 500 million pieces of gloves in the next one year.
ATS, in a filing to Bursa Malaysia today, did not disclose the price it was paying but sources said Pearl Glove's contract was valued at about RM100 million.
"ATS is buying PGSB with the intention to double the production capacity beyond 2021.
"ATS is looking at glove manfacturing as the next biggest business. This will be a long term business for the company," said a source.
Pearl Glove, which was incorporated in 2008, has specialty in original equipment manufacturing (OEM) and original design manufacturing (ODM) products.
The company designs, develops and manufactures industrial gloves and is venturing into the production of single use disposable examination gloves.
ATS said it had signed a Letter of Intent (LoI) with Aaron Khoo Teng Soon, a representative of the shareholders of Pearl Glove to buy the company.
The acquisition was subject to due diligence, regulatory and shareholder approval, it added.
ATS said the LoI provided the company with an opportunity to acquire a business to expand its foothold in the healthcare business and to leverage on the favourable outlook of the healthcare industry.
"As the coronavirus crisis continues, the company views this is an appropriate time to embark on this to capitalise on the increase in demand on the single use disposable examination gloves," the company said.
ATS said it would be ready to supplement the requirement of continuous growth for gloves by end-2020.
"Should the rise in demand be consistent, ATS will be able to participate as an OEM manufacturer of existing producers, while investing in research and development to develop its own branding and products," it said.
Malaysia currently accounts for 67 per cent of the global market's glove business.