KUALA LUMPUR: Sime Darby Bhd
intends to spin off its plantation and property businesses into two new listed companies, leaving it with the trading and logistics businesses, under a plan to create three stand-alone pure plays.
The conglomerate said in a press statement that this initiative would enable each business to pursue its distinct aspirations with greater focus and agility, taking advantage of potential growth opportunities to maximise value for all shareholders.
Sime Darby, which has a market value of RM60bil, said it would evaluate the implementation measures and indicative timelines to give effect to the board’s decision.
It will make appropriate disclosures after getting final approval of the board following the evaluations.
“Our focus was and will always be our shareholders and how best to deliver and create more value,” said president and group chief executive Tan Sri Mohd Bakke Salleh.
“The board’s decision is the crucial next step we must take in order to achieve the original aspirations of the shareholders in 2007 when the new, enlarged Sime Darby was created with the merger of Golden Hope Plantations Bhd, Kumpulan Guthrie Bhd and Kumpulan Sime Darby Bhd.”
Mohd Bakke added that with this move, shareholders would benefit from the growth potential in each of the three entities.
“Each business will bear the Sime Darby brand name and will continue the rich heritage of the 106-year-old Malaysian icon to develop and nurture Malaysian champions which are capable of competing on the global stage,” Sime Darby said.
Sime Darby’s property division, although contributing only 7% of the group’s revenue of RM43.96bil for the financial year ended June 30, 2016 (FY16), accounted for 35% -- or RM1.1bil -- of Sime’s profit before interest and tax of RM3.1bil. However, the 19.7% jump in the division's FY16 profit was mainly due to gains from disposals totalling RM816mil.
The plantation division, meanwhile, contributed 27% of the group’s revenue and 34% of its profit. The division's profit fell 18.5% in FY16 due to higher operating costs and lower fresh fruit bunch production.
The Sime Darby announcement did not give any timetable for the listings. However, at a media conference in November last year, Mohd Bakke singled out the plantation business as being ready for a separate listing, adding that its listing might take place within 12 months from then.
The creation of the new businesses will be subject to the final approval of the board, shareholders, and listing requirements and regulatory approvals.
Sime Darby became the world’s largest listed palm oil producer when the enlarged company was listed on Nov 30, 2007. It is also Malaysia’s largest listed property developer in terms of land bank.
The counter closed 12 sen higher on Thursday at RM8.82, for a market capitalisation of RM60bil.