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Richard
Pieris and Company (RPC) yesterday divested 5.88 million
shares of Dipped Products Ltd., (DPL) amounting to 19.6%
of the total capital at a price of Rs.117.50 per share
for a total consideration of Rs. 691 million.
The price of Rs. 117.50 was a premium of approximately
15% on market and this helped RPC to book a profit of Rs
325 million. The buyers were Hayleys and its associates
thus enabling Hayleys Group to further consolidate its
holding in the leading latex glove manufacturing entity.
Several of Hayleys foreign partners who have joint
ventures overseas also bought in to DPL.
RPC held a total of 8, 880,615 shares prior to this
divestiture, and still holds 10% of the capital of DPL.
This too is expected to be divested later on.
RPC Chief Operating Officer Pravir Samarasinghe said:
"DPL was an associate company of ours and we used to
annually book our share of profits in our consolidated
accounts, but we enjoyed only a relatively low cash
return with dividend yields ranging from 4% to 5%.
Therefore we felt it was timely for us to exit from this
investment and use the funds initially to reduce our
debt and further strengthen our balance sheet, and this
will better position us to aggressively pursue other
strategic growth opportunities including acquisitions to
fast track the Group's growth momentum". He also stated
that the Group had identified certain new high growth
sectors to enter and are carefully evaluating these
areas.
Share price of both RPC and Hayleys shot up following
the deal.
RPC reported an 87% increase in group turnover to Rs.
4.5 billion and 120% increase in Group profits to RS.236
Mn. in their interim financial statements for the six
months ending 30th September 2004.
DPL was started in 1976 (as a joint venture between
Hayleys and RPC with the rubber technological backing of
Richard Pieris’ and over the years the Company had grown
in to one of the leading global manufacturers of non
medical latex gloves.
DPL also has controlling interests in Kelani Valley
Plantations that has rubber and tea estates and has more
recently ventured in to the export of tea.
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