KUALA LUMPUR (July 14): Rubber glove maker Flexidynamic Holdings Bhd (KL:FLEXI) plans to diversify into the gamma sterilisation business by acquiring a 51% stake in Gammatech Sdn Bhd for RM16.08 million.
Gammatech specialises in providing sterilisation services using gamma radiation for the medical, pharmaceutical, food and agriculture sectors.
To fund the purchase, Flexidynamic plans to issue new shares equal to up to 30% of its current share base. The diversification move will require shareholder approval.
The company in a filing with the bourse said since Gammatech hasn’t started business yet, the shares are priced at RM1 each, matching an earlier subscription price from July 2024. Flexidynamic’s partner Eco Santec Sdn Bhd will own the remaining 49%.
They plan to buy land in Teluk Panglima Garang, Selangor, to build a gamma irradiation facility.
Gammatech will acquire the 1.63-hectare industrial land for RM15.45 million by issuing 15.45 million new shares to the seller, H&A Ventures Sdn Bhd.
Flexidynamic said it hired Eco Asia Capital Advisory to study the project’s financial viability. The study shows a strong internal rate of return (IRR) of 12.3%, above the company’s 5.3% cost of capital, suggesting the project is financially sound—assuming no major problems occur.
According to the company, all necessary regulatory approvals for the facility have been obtained and the plant is expected to start operating by the end of 2026. The industry is regulated by Malaysia’s Atomic Energy Licensing Board (AELB) and Gammatech already holds a Class A license and local planning approvals. It said the project will cost about RM58.73 million and will be funded, among others, by RM27.73 million in bank loans and RM14.92 million from shareholder advances.
The private placement — of up to 30% of its issued share capital — is expected to raise RM17.98 million based on an illustrative issue price of 20 sen per share. In addition, the group proposed a one-for-four bonus issue of free warrants, with details to be announced later.
The new business direction comes as Flexidynamic noted the challenging conditions in the glove manufacturing sector, which saw Flexidynamic’s revenue decline by half over the last three financial years — from RM105.78 million in FY2021 to RM52.7 million in FY2024 — alongside fluctuating profits.
Flexidynamic’s core business is mainly involved in the design, engineering, installation, and maintenance of glove chlorination systems, storage tanks, and related infrastructure for the glove manufacturing sector. It also trades in replacement parts for these systems.
The company said the move into gamma sterilisation is a strategic effort to diversify its revenue base and reduce reliance on the glove industry, while leveraging existing engineering and technical expertise in a new, high-growth vertical.
The group expects the sterilisation facility to be constructed and completed by end December 2026. The facility will begin operations with an initial capacity of up to 1 million curies — a unit used to measure how active or strong a radioactive material is. This will allow the facility to process around 109,222 tote bins (meaning the containers used to sterilise the materials) over a 10-year period.
Shares in Flexidynamic closed unchanged at 16.5 sen on Monday, valuing the company at RM47.99 million. The stock has declined over 8% year-to-date.