KUALA LUMPUR (Aug 12): The world’s largest condom manufacturer Karex Bhd has proposed to purchase loss-making company Medical-Latex (Dua) Sdn Bhd (MLD) from Beiersdorf Aktiengesellschaft AG for RM13 million cash.

In a filing with Bursa Malaysia today, Karex said it has signed a conditional share purchase agreement (SPA) with Beiersdorf to buyout the entire stake in MLD.

Karex said the acquisition, expected to be completed by early October, will be financed by the proceeds raised from its private placement exercise completed in March this year.

In a statement, Karex said MLD and Beiersdorf have also signed an original equipment manufacturing and supply agreement to appoint MLD as the exclusive manufacturer of all condoms for Beiersdorf and its subsidiaries.  

Presently, MLD manufactures Beierdorf’s condom brands, such as Duo and Harmony.  

The SPA includes the right of first refusal for Karex to acquire the Duo and Harmony brands, should it be up for sale in the future, which will further enhance Karex’s market position and continue to carve its footprint in the own brand manufacturing segment.  

Karex' chief executive officer Goh Miah Kiat said, “Upon completion of this transaction, we are essentially adding a reputable condom manufacturer to the group, as well as securing a long term supply contract to a global multinational corporation.”  

MLD, which has been manufacturing condoms since 1987, owns the brand ESP, which is growing in the retail market of Singapore and Malaysia.

Beiersdorf, a leading global skin care player with strong brands such as NIVEA, Eucerin and La Prairie, is a German multinational company listed on the Frankfurt Stock Exchange, with a market capitalisation of EUR20.3 billion as at Aug 11, 2015.

Goh said the ESP brand will complement the existing brands, as well as Karex’s recent purchase of a 55% stake in US-based Global Protection Corp (GP) — the company that owns ONE brand condoms.

With 55% stake in GP, Karex reportedly has the rights to distribute the ONE brand in South-East Asia, China (including Hong Kong), Taiwan, North Africa, Middle East, Australia, New Zealand, Japan and South Korea.

MLD is located in Senai, Johor Bahru, on 6 acres of land, within 50km to Karex’s existing Pontian Plant.

Karex' shares closed 27 sen or 8.04% lower at RM3.09 today, for a market capitalisation of RM2.078 billion.