PETALING JAYA: Plantation company Kuala Lumpur Kepong Bhd (KLK) is expected to launch a takeover bid of IJM Plantations Bhd (IJMP) after the shares of both companies were suspended from trading in the afternoon session of trading yesterday.
IJM Corp Bhd, which has a 56.2% stake in subsidiary IJMP, was also suspended from trading as it prepares to announce a corporate proposal involving IJMP.
A potential acquisition of IJMP by KLK could see the latter’s total combined plantation land bank rising to almost 336, 000ha, according to information obtained from the respective companies’ website.
IJMP has 60, 966ha in total planted area in Sabah, east Kalimantan and Sumatra. The planter has a relatively young palm age profile in its operations in Indonesia.
KLK, which is one of Malaysia’s largest plantation companies, has close to 275, 000ha across the peninsula, Sabah, Belitung island, Sumatra, central and east Kalimantan in Indonesia and Liberia
When contacted by StarBiz, analysts declined to comment until more details of the transaction are announced by today.
Both companies’ shares rose prior to their trading suspension at 2.30pm yesterday.
IJMP gained 11.82% to RM2.46 with 5.69 million shares changing hands while KLK also posted a gain at a smaller quantum of 0.74% or 16 sen with 117, 300 shares changing hands at midday trade.
“Crude palm oil (CPO) prices have been in the spotlight this year, given the rally alongside other global commodities.
“With the rise in CPO prices to historic highs, plantation companies have seen their fortunes rising, ” said an observer.
As the US dollar weakness continues on the global front, commodity prices, including CPO, have been trending on the upside.
KLK reported that its second quarter net profit ended March 31, had risen some 17 times to RM490.44mil from RM27.89mil in the same quarter a year ago.
The strong results by KLK were mainly driven by higher profits from its plantation, manufacturing and property development segments.
With such strong returns, industry observers noted that it came as no surprise that KLK, with deep pockets, would resume its acquisition trail. KLK has been on an active acquisition mode over the past few years.
Last year, KLK’s indirect unit Taiko Plantations Pte Ltd (TPPL) acquired TSH Resources Bhd’s 90% stakes in its subsidiaries in Indonesia for US$109.23mil (RM450mil).
The transaction saw TSH Resources realising cash proceeds of RM517.62mil that went toward paring down its debt.
KLK had, in 2018, also acquired a 95% stake in an Indonesian oil palm company, PT Putra Bongan Jaya which has plantations in East Kalimantan for about RM300mil.
Yesterday, the third benchmark CPO futures contract for August closed RM88 lower to RM4, 049 per tonne.
Early last month, the CPO price have risen to a historical high of almost RM4, 700 per tonne as the markets priced-in and were looking forward to an economic recovery post-Covid 19.