Palm oil, the world’s leading oil and fat, has admittedly come under intense scrutiny over the years on allegations of its unsustainable production and deforestation to grow its crop - more than any of its oil competitors.
KUALA LUMPUR: Kuala Lumpur Kepong Bhd
(KLK) has sweetened its takeover offer for London-listed MP Evans Group Plc, which operates plantations in Indonesia and Malaysia, from 640 pence (RM34.41) to 740 pence (RM39.78).
However, MP Evans’ board, which received the latest proposal last Friday, announced that it was rejecting the improved offer and “strongly urged” its shareholders not to sell their shares.
The board said it, having considered the latest offer with its financial adviser Rothschild, felt the offer “very substantially undervalues the company.”
KLK’s latest all-cash offer follows MP Evans’ announcement last month that investors holding more than 50% of its shares intended to reject KLK’s original cash offer, which the board also said to “very substantially” undervalued the company.
In a filing with Bursa Malaysia on Tuesday, KLK -- one of Malaysia’s largest plantation companies -- said the increased offer was final and “not capable of being increased”.
However, KL-Kepong International Bhd (KLKI), KLK’s unit that is making the offer, reserves the right to raise trhe price per MP Evans share in the event of a public announcement of the existence of a new offeror or potential offeror (whether publicly identified or not) or the recommendation of an increased offer by KLK or KLKI from MP Evans board.
KLK’s latest offer values MP Evans at £415.4mil (RM2.23bil) and is a 73.6% premium over the closing price of 426.25 pence per MP Evans share on Oct 24, the last business day before the offer period began.
Like the earlier offer, it is conditional on the KLK group receiving valid acceptances, together with MP Evans shares acquired or agreed to be acquired, that carry a combined total of more than 50% voting rights in MP Evans.
The cash consideration payable would be funded through an amended acquisition loan facility provided by The Hongkong and Shanghai Banking Corp Ltd to which KLKI and KLK are parties to, as borrower and guarantor respectively. The KLK group’s gearing ratio for the financial year ended Sept 30, 2015, will rise from 0.43 to 0.65 times.
On the rationale for the higher offer, KLK said it continued to see strategic merit in synergising the operations of MP Evans with KLK’s from a geographical and capabilities perspective.
Based on its 2016 interim financial report, MP Evans has 26,600 planted hectares of majority-held oil palm plantations (with three operational palm oil mills) and 21,900 planted hectares of minority-held oil palm and rubber plantations (two palm oil mills and a crumb-rubber factory) in Indonesia.
In Peninsular Malaysia, it has 70ha of plantation land and holds a 40% stake in property firm Bertam Properties Sdn Bhd with a land bank of 330ha.
KLK’s first offer was rejected by MP Evans board on Oct 13 but it subsequently took the same offer directly to MP Evans’ shareholders.
KLK said the formal offer document on the increased offer would be posted on or before Nov 22.
KLK shares closed 16 sen higher at RM23.70 on Tuesday with 73,400 shares changing hands.
Limited time offer:
Just RM5 per month.
