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Dipped Products Limited (DPL) will acquire a controlling interest in ICO Guanti Spa of Genoa, Italy, its largest distributor in Europe, in a move that will see this world-class glove manufacturer taking a position up the value chain in the distribution of its products.

The acquisition valued at US $ 855,000 (about Rs 81 million) funded entirely from the company's export earnings, would result in Dipped Products owning 55 per cent of ICO, which holds several brands widely accepted in Italy and in neighbouring countries such as Switzerland and France, the company said.

In an announcement to the Colombo Stock Exchange and to the company's shareholders at the DPL Annual General Meeting yesterday the company said the acquisition would significantly complement its recent investment in a medical examination gloves plant in Thailand, because ICO presently purchases on its own account, about 350 million medical examination gloves for distribution in Italy.

ICO Guanti was set up in 1968 and has been closely associated with Dipped Products for more than 22 years. The company at present accounts for about 15 per cent of DPL sales and has a turnover of US $ 10 million annually.

Commenting on the acquisition, a spokesman for Dipped Products said: "This will enable DPL to become vigourously involved in the rapidly changing markets of Europe. All our major competitors operate their global marketing offices and this investment in ICO Guanti will provide us with a unique opportunity to take a downstream position in marketing our gloves in Europe."

"We believe an investment of US $ 855,000 to acquire a controlling interest in a company that has a market share of US $ 10 million in Western Europe is cheap at the price offered. Our gross margins alone on sales to this company are in excess of this amount," he said.

Established in 1976 as a division of the Hayleys Group, Dipped Products pioneered the manufacture of latex gloves for export in Sri Lanka. A public listed company with assets of Rs 3.8 billion and a turnover of Rs 3 billion, Dipped Products is today the fourth largest non medical glove manufacturer in the world. The company recently made an initial investment of Rs 70 million in a US $ 7 million (Rs 660 million) manufacturing facility in Thailand in order to diversify into the manufacture of medical examination gloves.

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