The deal is the first big acquisition by LIG since a disastrous foray into photo- processing in the late 1980s almost brought the company down. Analysts said the purchase marked a shift from recovery to a new growth phase.
Nick Hodges, chief executive, said: "This is a landmark deal in the group's development and provides us with an exciting platform from which to achieve sustainable long-term growth in core business areas."
LIG will pay a maximum of pounds 46m for Aladan, which as well as its leading position in condoms brings a dominant place in the fast-growing examination glove market. Aladan has 13 per cent of the market and is considered well placed to benefit from a shift from powdered to powder-free gloves.
LIG has already introduced a powder-free surgeon's glove, Biogel, which is showing spectacular growth especially in the key US market. The new gloves sell at much higher prices than the powdered versions they replace, boosting margins in what was considered to be a mature market.
That is expected to help LIG meet target return on sales of 15 per cent by the middle of 1997. November's interim figures showed a rise in margins from 4.8 to 6.7 per cent. Analysts expect the return in the traditionally better second half to the end of March to have broken the 10 per cent barrier.
Since LIG was refinanced in 1994 it has focused on its core businesses of condoms and medical gloves, particularly in the US, the largest market for gloves and the second-biggest for branded condoms. It recently became the largest condom maker in Spain following the acquisition last month of Androtex, one of that country's largest manufacturers.
Aladan brings on board two low-cost manufacturing sites in Alabama.In the year to December, it made profits of $10.5m (pounds 7.0m) on sales of $85.9m (pounds 56.9m).