CFA Society Singapore
SINGAPORE (July 10): Shares in Malaysia-based Top Glove Corporation plunged 70 cents or 17% to $3.40 on Monday in Singapore after announcing its acquisition price of surgical glovemaker Aspion from Adventa Capital in April could have been overstated by as much as RM714.9 million ($240 million).
On Bursa Malaysia where Top Glove has its primary listing, the counter fell 24.6% or RM2.97 to close at RM9.13 with 50.25 million shares traded.
The overstatement was based on an interim report provided by an independent accounting firm hired by Top Glove to investigate the irregularities found in Aspion’s accounts after it took over the company following the completion of the share purchase agreement (SPA), said Top Glove in a clarification filing on Monday night.
It was last Friday when Top Glove first announced it was suing Adventa, two directors Low Chin Guan and Wong Chin Toh, and ACPL Sdn Bhd for up to RM714.9 million arising from an alleged conspiracy to defraud Top Glove and subsidiary Top Care in relation to the RM1.4 billion acquisition as well as fraudulent misrepresentations made by Low and Wong which resulted in the group agreeing to enter into the SPA back in January with Adventa to purchase Aspion.
Adventa Capital was then 30% owned by Low, who is a major shareholder of Bursa-listed Adventa Bhd.
In January, Top Glove said the price consideration for the acquisition of RM1.37 million was arrived at on a willing buyer, willing seller basis and based on price-earnings multiple of 16.93 times 2018 core profit after tax (PAT) of Adventa.
According to Top Glove’s Monday night clarification, the litigation will not impact Aspion’s business, which are expected to continue as usual, and that the group’s operations remained resilient and scalable with a healthy cash flow.