KUALA LUMPUR (June 19): Flexidynamic Holdings Bhd (KL:FLEXI) said on Thursday it is acquiring a loss-making manufacturer of glove formers, Formtech Engineering (M) Sdn Bhd, for RM10.39 million.

Although Formtech has accumulated losses of RM4.5 million, the acquisition offers long-term value and growth opportunities, as it will expand Flexidynamic’s portfolio and diversify its income streams, the group said in a filing with Bursa Malaysia.

Formtech, which is based in Nilai, Negeri Sembilan, has been loss-making for the past three years, following industry-wide overexpansion in glove production capacity during the Covid-19 pandemic. It recorded a net loss of RM739,000 for the financial year ended Dec 31, 2022 (FY2022), RM8.89 million for FY2023 and RM828,000 for FY2024.

Flexidynamic said Formtech's audited net asset (NA) was RM3.8 million as at end-December 2024. "Based on this, the purchase consideration of RM10.4 million represents a price to NA ratio of 2.75 times," the group noted.

Flexidynamic is acquiring Formtech from HARPS Investment Asia Pte Ltd (a 69.88% stake) and Dietmar Trumm and Valluvan Peramuthu (a 30.12% stake). The purchase will be fully funded through internally generated funds.

Flexidynamic’s principal activities involve the provision of design, engineering, installation and commissioning of glove chlorination systems, as well as design and installation of storage tanks and process tanks for the glove manufacturing industry.

“The group shall tap into its existing clientele to offer additional products (i.e. glove formers) and is confident to turnaround the financial results of Formtech,” Flexidynamic said.

It noted that Formtech has an installed production capacity of 180,000 pieces per month, with a utilisation rate of 30% in the year ended Dec 31, 2024. The excess capacity at its existing glove former manufacturing facility allows Formtech to accommodate any increase in demand without incurring the time and cost of building a new facility. This will also enable Formtech to leverage Flexidynamic’s existing customer network to tap into additional untapped capacity.

“Moving forward, as both Formtech and Flexidynamic operate in the glove industry with non-overlapping customer bases, this allows for strong synergies and cross-selling opportunities for both companies. The proposed acquisition is expected to ramp up production capacity of both companies by leveraging on its respective existing marketing resources and is expected to improve the financial performance of both companies in future financial years,” said Flexidynamic.

Shares of Flexidynamic rose 9.68% or 1.5 sen to close at 17 sen on Thursday, giving it a market capitalisation of RM46.5 million.