CIty of Elmina - Artist rendition of the project which is undertaken by E&O and SIme Darby. Provided by PR Company to StarBiz - joseph chin
KUALA LUMPUR: Sime Darby Bhd
and I & P Group Sdn Bhd -- two companies that are ultimately owned by fund manager Permodalan Nasional Bhd -- are exchanging assets worth RM535.5mil in a bid to create a better strategic fit.
Sime Darby, through unit Sime Darby Plantation Sdn Bhd (SDP), will expand its plantation area for the first time since 2007 with quality existing estates in Johor while the I & P Group’s subsidiary Petaling Garden Sdn Bhd will gain sizeable agriculture land totalling 325.8ha in Selangor that has received approval to be rezoned as residential.
In a filing with Bursa Malaysia on Thursday, the conglomerate said SDP proposed to dispose the Semenyih land to I & P for RM428.8mil in cash, as the Hulu Langat district was not its key development focus area. This will free its resources for strategic projects.
“Our property division will be able to focus on strategic developments such as the Malaysia Vision Valley and City of Elmina,” said president and group chief executive Tan Sri Mohd Bakke Salleh in a press statement.
As for the oil palm trees on the land, they are aged above 15 years, and the fresh fruit bunch output has been falling annually.
Sime Darby is expected to record a gain on disposal of RM295.7mil. It said the proposed land disposal, to be completed by June 30, 2018, was in line with its strategy to unlock value through monetisation and opportunistic divestments.
Petaling Garden, a property development and investment firm, will benefit from securing a sizeable piece of land in Semenyih.
In a separate transaction, SDP will acquire oil palm plantation land totalling 768.5ha in Kluang and Batu Pahat, Johor, from two of I & P units. It will pay RM106.7mil in cash for these assets, which include a palm oil mill and equipment.
SDP managing director Datuk Franki Anthony Dass said: “This is a rare opportunity for us to acquire quality brownfield estates in Peninsular Malaysia. Not only will we get immediate earnings but we will be able to deliver more value generating synergies and cost savings by sharing estate and mill management,”
Sime Darby said both the estates to be acquired were located close to its oil palm plantations in central Johor so the proposed acquisitions also had the potential to generate synergies and cost savings in terms of sharing estates and mills management.
The acquisitions are expected to be completed by the first quarter of the financial year ending June 30, 2018.
Sime Darby said the land disposal and asset acquisition were not conditional on each another.
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