Adventa deny takeover plan

This is the word-by-word copy and paste from Bursa website


With reference to the article “Adventa Bhd hit limit up yesterday on speculation that it could be a potential acquisition target by a healthcare firm based in the US.” which appeared in the Edge Daily on 24th December 2010, the Board of Directors of Adventa Berhad ( “Company “) wishes to state that they are presently not involved in any discussions of any intended acquisitions of Adventa with a US firm. The Company periodically receives expressions of interest on an exploratory basis from other parties but there has been no material change in circumstances.

This announcement is dated 24 December 2010.


My view:
At 12.33pm I mentioned that Adventa is not that attractive for takeover, didn't expect Adventa to reply to Bursa query so fast. Well, normally Company take up to 1 day, meaning Adventa can choose to release the query after market close.

Why do they instead choose to release the info during lunch time? This is very interesting, let's wait and see what will happen.

But if I am the US firm, the maximum that I want to pay will be the 6.8x forward PER (same PER as LATEXX), meaning maximum I want to pay is RM2.09 per share for Adventa. What does not mean? Temporary avoid ADVENTA until it drop below RM2.09...

Adventa: Synergy, Valuation & Prospect

It was reported in The Edge Financial Daily today that"


US firm looking at Adventa acquisition?
Rubber glove manufacturer Adventa Bhd hit limit up yesterday on speculation that it could be a potential acquisition target by a healthcare firm based in the US...


My view:

If I were the US buyer, I will look at 2 things to decide whether to buy Adventa: i) synergy and ii) valuation

i) Synergy
The synergy is there as US healthcare firm could use the gloves for their own operation, e.g. their their workers may need to wear gloves when handling the drug manufacturing line. Besides, they can also look at new revenue generation source by selling the gloves in US. So, from synergy point of view, the intention is there...

ii) Valuation
The consensus is expecting Adventa to earn EPS of 30.8sen in FY2011 ending Oct 31. At yesterday close price of RM2.64, ADVENTA is trading at 8.6x forward PER of 2011.

Let's compare ADVENTA forward PER with LATEXX and KOSSAN. After adjusting their forward PER to end at 31 Oct and using yesterday close price as reference, LATEXX forward PER is 6.8x while KOSSAN is 7.9x. Rearrange it in simple way to compare using forward PER:


ADVENTA: 8.6x
LATEXX: 6.8x
KOSSAN: 7.9x

The only attractiveness is Adventa smaller market capitalization at about RM400m, but 8.6x forward PER is already 10% higher than KOSSAN forward PER.

So, from valuation point of view, it is not that attractive anymore.