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KUALA LUMPUR (Dec 7): Tropicana Corp Bhd today announced a couple of boardroom changes, including the resignation of an independent director and the reassignment of one to a senior independent director position, while the company was asked to justify its recent acquisitions of RM78. 47 million in shares of Top Glove Corp Bhd.
In separate filings today, Tropicana said its independent, non-executive director, Loh Chen Peng, 66, who is also a member of the group’s risk committee, resigned from the board due to health concerns, effective December 5. .
At the same time, another independent director, 47-year-old Datuk Tang Vee Mun, has been appointed senior independent director, effective today.
Meanwhile, Tropicana also announced that it has been requested by the stock exchange to, among others, justify the logic of the group’s purchases of 11.25 million Top Glove shares last Friday through the open market, given that the business is different from the main activities of Tropicana.
The exchange also wanted to know why Tropicana, which shares a common shareholder and chairman with Top Glove in Tan Sri Dr Lim Wee Chai, chose Top Glove over other glove companies. The group was also asked to explain the prospects and risk factors of the acquisitions, given “the commercialization of the Covid-19 vaccine in the near future, which may hamper global demand for gloves, as well as the potential negative impact. on the stock prices of glove companies, including Top Glove. “
In response, Tropicana said that Top Glove shares were traded at prevailing market prices on the open market on the dates, between RM6,528 and RM28,898 (before Top Glove’s two-for-one bonus issue) each. a.
He said Lim, who is the founder of Top Glove, in which he controls a 25.68% stake (he is also among the top three shareholders with an 11.07% stake in Tropicana), had voluntarily abstained from deliberating. and vote for acquisitions.
He also said the acquisitions were carried out as part of its investment strategy to capitalize on Top Glove’s robust growth potential.
“The company has chosen to invest in Top Glove rather than other glove companies as Top Glove is the largest glove manufacturer in the world. It currently captures approximately 26% of the global rubber glove market share. Top Glove has also demonstrated consistent growth with a compound annual growth rate of 23.1% for revenue and 28.2% for after-tax earnings for the past 20 years, “said Tropicana.
“The acquisitions allow the company to benefit from the glove manufacturing and marketing prospects, which are largely driven by increased global demand for gloves due to the ongoing Covid-19 pandemic and also the growth of the global glove industry. Health services”. added.
Last Friday, The Edge reported that Tropicana’s stock purchases in Top Glove had raised questions about why it was buying into the group, whose stock price had been declining, weighed in on developments in the vaccine discovery space and the increase in Covid-19 infections. among its workers that it had caused the temporary closures of 28 of its factories, or half of its production capacity.
Tropicana shares fell 1.14% to close at 87 sen today, giving the group a market capitalization of RM1.2 billion.
Top Glove, which has spent more than RM1 billion to buy back its own shares since September as its share price declines, ended the day at RM6.60, five sen or 0.75% less than the previous day’s close for a market capitalization of RM54. One billion. While the stock is down 25% since the beginning of September, it is still up 320% so far this year.
Read also:
Tropicana’s purchase of Top Glove shares surprises
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