KUALA LUMPUR, Aug 24 — Kuala Lumpur Kepong Bhd (KLK) has proposed to acquire 739.20 million or 33 per cent and one share of Boustead Plantations Bhd (BPlant) from Boustead Holdings Bhd (BHB) for RM1.15 billion.
In a filing with Bursa Malaysia, KLK has also proposed a mandatory take-over offer to acquire all the remaining BPlant shares not already owned by KLK, BHB and Lembaga Tabung Angkatan Tentera (LTAT) resulting from the proposed acquisition at RM1.55 per BPlant share.
The offer price values BPlant at RM3.47 billion. Currently, BHB holds a 57.42 per cent stake in BPlant and LTAT a 10.59 per cent stake.
On completion of the proposed acquisition, KLK’s shareholding in BPlant will rise from nil to 33 per cent and 1 share, while BHB and LTAT will collectively retain their remaining interest of about 35 per cent.
KLK said both the acquisition and mandatory offer are expected to be completed in the fourth quarter of 2023.
It will be funded via a combination of bank borrowings and internally generated funds, the proportion to be determined later on after considering, among others, KLK and its subsidiaries’ gearing and operating cash flow needs.
“This collaboration with its synergies will unlock greater value for stakeholders within the business value chain. We are confident that this will put both BHB and LTAT on a firm footing towards a sustainable future,” LTAT chief executive Datuk Nazim Rahman said in separate statement.
The collaboration will strengthen the existing co-operation between KLK and BHB and boost KLK group plantation business’ long-term growth strategy, KLK chief executive officer Tan Sri Lee Oi Hian said.
KLK told Bursa the tripartite strategic collaboration agreement (SCA) between KLK, BHB and LTAT serves to enhance the operational efficiencies and crude palm oil yields of BPlant plantations over the long term.
The SCA is expected to enhance KLK group earnings and earnings per share for the financial year ending Sept 30, 2024, said KLK.
As part of the value creation exercise under the SCA, BHB and LTAT are granted the first right of refusal for two plantation estates, namely Balau and Bukit Mertajam (Mayfield Division) estates, totalling about 728 hectares (ha) for development, which would add value to BHB, it said.
As at Dec 31, 2022, BPlant group manages 42 oil palm estates (16 in Peninsular Malaysia and 26 in Sabah and Sarawak) and has 10 palm oil mills (three in Peninsular Malaysia, five in Sabah and two in Sarawak).
It has land totalling 97,399 ha and a planted area of 72,291 ha, or 74.2 per cent of its total land bank in Peninsular Malaysia (23,336 ha), Sabah (38,670 ha) and Sarawak (10,285 ha), it said in the filing.
Prospects of BPlant
The BPlant group has embarked on a path of continued growth that revolves around yield improvement initiatives, including an enhanced performance improvement programme that emphasises on digitalisation and mechanisation to boost yield maximisation.
It has also undertaken an asset rebalancing strategy, via a 25-year replanting programme to achieve a more ideal age profile of its estates, as well as the disposal of selected plantations to reduce the total acreage of trees older than 20 years to a more manageable level.
For the year ahead, the BPlant group intends to continue capitalising on the availability of higher-yielding semi-clonal and bi-clonal planting materials, superior palms for cloning with lower mantling rates as well as improved planning and monitoring to achieve a higher standard of planting and a higher sustainable yield.
To maximise yield productivity in potentially acid sulphate soils and other flood-prone areas, the group intends to further improve weather data collection and drainage system designs, the filing said.
It is also focused on maximising fertiliser application effectiveness, minimising nutrient loss using smart fertiliser spreaders and exploring in-house nitrogen-fixing bacteria and Ganoderma disease suppressive microbes usage.
It will continue to focus on asset rebalancing and plantation performance improvement initiatives by enhancing yield and estate efficiency, as well as improving cost efficiencies.
In addition, the group anticipates palm oil production to stay strong, supported by falling labour shortage concerns. — Bernama
