KLK offers RM1.53bil to acquire IJM Corp's entire stake in plantation unit

KUALA LUMPUR: Palm oil group Kuala Lumpur Kepong Bhd (KLK) has offered to purchase IJM Corp Bhd's entire 56.2% stake in IJM Plantations Bhd for RM1.534bil cash.

This offer, which valued IJM Plantations's shares at RM3.10 each, is valid until June 11.

IJM Corp said today that it has agreed in principle to accept the offer.

"After having deliberated on the merits of the Offer, the Board is in principle agreeable to finalise the terms and conditions with KLK in order to meet the timing specified in the Offer Letter for the execution of the sale and purchase agreement on or before 5pm on June 11," IJM Corp said in a filing with Bursa Malaysia today.

The securities of KLK, IJM Corp and IJM Plantations have been suspended from trading since Tuesday afternoon to make way for the announcement. The counters will resume trading on Thursday.

Shares in IJM Plantations were last traded at RM2.46. KLK's offer valued the company at RM2.73bil.

Under the stock exchange's rules, KLK would be require to extend its takeover offer at RM3.10 per share to all remaining minority shareholders in IJM Plantations if the deal with IJM Corp goes through.

Aside from the boards, the proposed acquisition is also subject to other shareholders' approval at an EGM to be convened, as well as consent from lenders and authorities, KLK said.

"Upon the execution of the sales and purchase agreement (SPA) and the same becoming unconditional, KLK will be obliged to extend a mandatory general offer to acquire all the remaining IJM Plantations shares not already held by KLK and persons acting in concert with it for a cash offer price of RM3.10 per share," KLK said in a separate filing with Bursa Malaysia today.

The company has confirmed it has the financial resources to complete the deal.

The acquisition was expected to increase KLK’s planted oil palm estates by 28.7% to 274,688 hectares, CGS-CIMB Research said in a note earlier.

The deal, it said, would also allow KLK to lower its average age profile slightly as the average age of its palm oil estates of 12.2 years is higher than IJM Plantations’s 11.8 years. "KLK should have no problem funding the acquisition by cash as KL Kepong has cash balance of RM4bil as at end-Mar 2021 and net gearing level of 24%," it said.