Top Glove Corp Bhd entered into a Memorandum of Understanding to negotiate the terms for the acquisition of Adventa Bhd’s unit, Aspion Sdn Bhd, a surgical glove maker. The purchase consideration will be based on a net profit of RM80.0 mln for Aspion in FY18, a guarantee by Adventa to reimburse Top Glove for any shortfall in the net profit and a contemplated priceto-earnings multiple of 16.0x-18.0x the 2018 target net profit.
The transaction will be satisfied via cash and shares, with the issuance of new shares not exceeding 10.0% of the value of the acquisition. Following the acquisition, the current management team of Aspion is expected to stay on with the company. The proposed acquisition of Aspion will help Top Glove to establish the group as the largest surgical glove exporter in Malaysia, develop its presence in the surgical glove market as well as boost gross profit margins. (The Star Online)

Brought at 0.605,should hold or sell?