KLK makes RM1.8bil hostile bid for London-listed M.P. Evans

This picture taken on September 16, 2015 shows a worker handling palm oil seeds at a plantation area in Pelalawan, Riau province in Indonesia's Sumatra island. Indonesia has some of the world's most extensive and biodiverse rainforests, but huge swathes have been chopped down by palm oil, mining and timber companies. Palm oil -- used primarily in the cosmetics, food, and bio-fuel sectors -- is a controversial industry, with campaigns mounted by environmental groups and consumers. The main cause of choking haze across much of Southeast Asia is illegal fires started in peatland and forest on Sumatra and the Indonesian part of Borneo to quickly and cheaply clear land for palm oil and pulp and paper plantations. The illegal fires increased in number as plantations expanded, in particular due to rising global demand for palm oil. AFP PHOTO / ADEK BERRY

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK), whose £359.3mil (RM1.82bil) all-cash offer to take over London-listed plantation firm M.P. Evans Group PLC was earlier rejected by the target company's board, is now taking the same proposal directly to M.P. Evans shareholders.

In a filing with Bursa Malaysia on Tuesday, KLK said it had made an announcement to the London Stock Exchange's Alternative Investment Market (AIM) of its intention to make the cash offer via wholly-owned KL-Kepong International Ltd (KLKI).

It is offering M.P. Evans shareholders 640 pence (RM32.16) per share in cash and they will continue to be entitled to receive the interim dividend of 2.25 pence (11.3 sen) per share announced by M.P. Evans on Sept 12 for the six-month period ended June 30, 2016.

The interim dividend combined with the offer consideration will give the shareholders 642.25 pence, about a 51% premium over the Oct 24 closing price of M.P. Evans share (426.25 pence).

KLK, ranked among Malaysia's largest plantation companies, said the cash consideration would be financed through a loan facility provided by The Hongkong and Shanghai Banking Corp Ltd, to which KLKI and KLK are parties as borrower and guarantor, respectively. 

If KLKI acquires all M.P. Evans shares, the group's gearing is expected to increase by RM2bil to RM6.6bil for the financial year ending Sept 30, 2017. This represents a gearing ratio of 0.62 from 0.44 previously.
 
KLK, which currently does not own any M.P. Evans shares, said it believed there was “strategic merit in synergising the operations of M.P. Evans with KLK’s from a geographical and capabilities perspective.”