MP Evans uses valuation report to justify rejecting KLK’s offer

epa05651461 (21/42) A truck loaded with harvested palm oil fruits at a palm oil plantation in Deli Serdang, North Sumatra, Indonesia, 16 September 2016. Indonesia is the world's largest producer of Palm Oil, made from the palm fruit, followed closely by Malaysia. Palm plantations built on destroyed tropical rainforest, have seen the death and displacements of many species, among them the endangered orangutan. Palm oil is an ingredient in many products across supermarket shelves. Consumer groups are pressing end users to buy only products containing substitutes or sustainably sourced palm oil, warning species and pristine habitats are on the brink of being lost forever to humankind. EPA/DEDI SINUHAJI PLEASE REFER TO THE ADVISORY NOTICE (epa05651440) FOR FULL PACKAGE TEXT

KUALA LUMPUR: London-listed oil palm and rubber plantation firm MP Evans Group PLC, which is the takeover target of Kuala Lumpur Kepong Bhd (KLK), said independent valuer Khong & Jaafar has valued its assets at 46% higher than the KLK offer.

In an announcement to London’s Alternative Investment Market on Monday, it said Khong & Jaafar, a Malaysian firm that specialises in the valuation of oil palm estates and property. valued the group’s land assets at US$665mil (RM2.97bil), “which implies an equity value of £10.82 (RM60.25) per share.”

In its sweetened bid to take over MP Evans, KLK had on Nov 15 offered £7.40 (RM41.20) per share. However, the next day MP Evans said shareholders holding 40.85% of its share capital intended to reject the offer.

KLK nonetheless posted its offer document to MP Evans shareholders without further revision to the offer price, noting that the letters of intent signed by shareholders holding 40.85% of the share capital were not binding.

MP Evans also pledged to pay an annual dividend, excluding special dividends, of at least 15 pence (83.5 sen) per share in respect of each 2016 and 2017, a jump of at least 71% compared with those paid in respect of 2015.

“On this basis, the final dividend in respect of 2016, to be paid in June 2017, will be at least 12.75 pence (71 sen) per share,” it said.

The company added that the board aimed to continue its policy of maintaining or, where possible, increasing the level of its annual dividend.

“The board also notes it has demonstrated its willingness to distribute surplus cash reserves to its shareholders. For instance, in the first half of 2016 a special dividend of 5 pence per share was declared following the sale of NAPCo (North Australian Pastoral Co), its Australian cattle business,” MP Evans said.

Of the £10.82 per share valuation for MP Evans’ assets (land assets and other assets combined), the company said its majority-owned estates alone were worth £6.25 per share.

In Indonesia, MP Evans has 23,548 planted hectares of majority-held oil palm plantations and 8,100 planted hectares of associate owned estates.

In addition to the KLK’s offer undervaluing its assets, MP Evans gave six other reasons for shareholders to reject the offer, including the price undervaluing the group’s future growth.