http://sgxstockpicker.blogspot.com/2010/12/updates-on-gmg-global-and-c-pharma.html
Updates On GMG Global and C&O Pharma
GMG Global recently announced that it would acquire slightly more that a majority stake in Thai rubber producer Teck Bee Hang for a nominal fee of USD 909. However, GMG Global will make out significant loans to Teck Bee Hang amounting to at least SGD62 million for the purpose of working capital as well as to finance outstanding debt. GMG Global says the move fits its expansion strategy and intends to turnaround the Thai rubber producer by 2011.
SGX Stockpicker Says...
GMG Global's acquisition of the loss making company makes good sense even if Teck Bee Hang is loss making. GMG Global needs access to the Thai market, which is the largest in the world. Although GMG Global has been trying to build its estate in Africa, the long gestation period does not fit with its controlling shareholders' objective of feeding the booming Chinese automobile company. GMG Global does have the financial muscle to revive the once largest rubber exporter in the world.
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