UG Healthcare Corporation has acquired a 50% stake in UG Nitrex, which was formerly known as Nitrex Seguridad Laboral S.L. for a consideration of EUR500,000 ($730,650).
UG Healthcare’s wholly-owned subsidiary, Unigloves (Singapore), entered into a sale and purchase agreement (SPA) with UG Nitrex’s initial shareholders, Spanish private company Afaprot and Maximino Martínez Tilve, on June 5.
Following the acquisition, which was completed on the same day, UG Nitrex will be accounted as a joint venture (JV) between UG Healthcare and the sellers of UG Nitrex.
UG Nitrex is a Spanish company that sales, markets and distributes reusable gloves that are used for industrial applications, safety footwear, and other personal protective equipment in Spain, as well as its neighbouring countries, Portugal and France.
The company has the relevant licences, certifications and trademarks of a wide range of reusable gloves for industrial applications and has been supplying its Nitrex and Sibille Safe range of gloves to UG Healthcare’s downstream business since October 2021.
The purchase includes the immediate ownership of the licenses, certifications and trademarks for over a hundred of stock keeping units (SKUs) of UG Nitrex’s portfolio of reusable gloves among others.
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Based on UG Nitrex’s unaudited financial statements for the FY2023 ended Dec 31, 2023, the net book value and net tangible asset value of the sale shares were EUR210,542 and EUR207,946 respectively. The net profit before tax attributable to the sale shares for the FY2023 were EUR28,213.
Put and call option agreement
UG Healthcare also entered into a put and call option agreement on June 5 regarding the sellers’ remaining shares in UG Nitrex, as well as a shareholders’ agreement.
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Under the call option, the sellers grant Unigloves the right to acquire and purchase 10 shares out of their remaining shares. The shares are to be purchased proportionally comprising nine shares owned by Afaprot and one share owned by Martinez. The call option may be exercised by Unigloves any time from July 1, 2027.
Should Unigloves exercise the call option, the purchase consideration will be calculated based on 1% multiplied by 5.5 times of UG Nitrex’s ebitda for its most recent financial year.
Under the put option, Unigloves grants UG Nitrex’s sellers the right to transfer and sell their remaining shares or at least 25% of their stake. The put option is granted for a single exercise.
The options will be extended to new shares if they are issued to the shareholders during the term of the options.
Unigloves Germany becomes a wholly-owned subsidiary
On May 8, UG Healthcare bought the remaining shares it does not own in Unigloves Germany for EUR16.94 million or $24.68 million. The purchase, which raised UG Healthcare’s stake from 19.29% to 100%, means the downstream company is now a wholly-owned subsidiary of the group.
UG Healthcare’s executive director and finance director Lee Jun Yih said that the acquisitions are “timely and highly beneficial” due to the immediate earnings contributions, immediate ownership of UG Nitrex’s proprietary product portfolio of reusable gloves, the ability to improve reliability and lead time as well as potential cost savings from centralised operations in Europe.
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“These benefits are expected to propel sustainable growth for the group in terms of sales revenue with the broadened product portfolio of reusable gloves, and ancillary products of safety footwear and personal protective equipment (PPEs) for industrial applications, and geographical footprint expansion in Southern Europe and Central Eastern Europe through the established platforms including local warehousing and logistics infrastructures in Germany and Spain,” he says.
On the increased stake in Unigloves Germany, Lee notes that Germany is the “heart and core of Europe” and the acquisition of the remaining stake is a “crucial step” for the group as it prepares to “make further inroads” into the European markets.
He adds that the JV with UG Nitrex serves as a “springboard” for the group’s global downstream distribution business and also presents an opportunity for the group to “explore new areas of business and expand [its] footprint in the neighbouring countries of Spain”.
Shares in UG Healthcare closed at 13.1 cents on June 5.
