KUALA LUMPUR: The world’s largest condom manufacturer Karex Bhd plans 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, Karex said it had signed a conditional share purchase agreement (SPA) with Beiersdorf to buy the entire stake in MLD.

Karex said the acquisition, expected to be completed by early October, would be funded by proceeds from its private placement exercise completed in March.

In a statement, Karex said MLD and Beiersdorf also signed an original equipment manufacturing and supply agreement to appoint MLD as the exclusive condom manufacturer for Beiersdorf and its units.

Presently, MLD manufactures condoms for Beierdorf under brands such as Duo and Harmony.

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

Karex chief executive officer Goh Miah Kiat (pic) said: “We are essentially adding a reputable condom manufacturer to the group, and securing a long-term supply contract with a global multinational corporation.”

MLD, which has been making condoms since 1987, owns the brand ESP, which is growing in Singapore and Malaysia.

Beiersdorf, a leading global skincare player with brands like Nivea, Eucerin and La Prairie, is a German multinational  listed on the Frankfurt Stock Exchange with a market capitalisation of €20.3 billion (RM90.61 billion) as at Tuesday.

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

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

MLD is located in Senai, Johor Baru, on a 2.43ha tract within 50km of Karex’s existing Pontian plant.

This article first appeared in digitaledge Daily, on August 13, 2015.