PETALING JAYA: Salcon Bhd’s subsidiary, Nusantara Jasakita Sdn Bhd, has entered into a share sale agreement to acquire a 51% stake in glove manufacturer JR Engineering and Medical Technologies (M) Sdn Bhd for a purchase consideration of RM28.56 million.
The proposed acquisition comes with a profit guarantee of RM10 million a year in JR Engineering for the financial years ending Dec 31 2021, 2022 and 2023.
Salcon executive director Datuk Eddy Leong said upon completion of the transaction, Salcon will have immediate access to a trained labour force, existing customers and an immediate source of revenue whilst cutting down on lengthy product approval and registration processes.
“The acquisition is well-aligned with Salcon’s strategy of growth and diversification. We are confident the resulting significant synergies, economies of scale and enlarged market presence will strengthen the group’s growth profile and bring greater long-term value to our stakeholders.
“Although there are other manufacturers ramping up production capacity and new entrants venturing into this sector, we believe a structural change in usage of gloves will ensure there will be continued and strong demand in the market in the near to mid term.” he added.
With an annual production of over 336 million gloves from four single former production lines in its factory located in Zurah Industrial, Rasa, Hulu Selangor, JR Engineering is currently operating beyond its capacity.
In order to cater to the spike in demand in specific export markets, the group is targeting to increase and ramp up production capacity by an additional 12 lines to a total of 16 production lines within one year at an estimated capital expenditure of RM150 million, to be funded via internally generated funds and bank borrowings.
Once completed, this will bring the total production capacity of the group to 3 billion gloves annually.
