Quick take: IJM Plantations jumps 21% on KLK acquisition

KUALA LUMPUR: Shares in IJM Plantations Bhd surged 21% after Kuala Lumpur Kepong Bhd (KLK) proposed to acquire a 56.2% stake in the former.

The planter added 21.14%, or 52 sen to RM2.98, making it the top gainers on Bursa Malaysia. KLK rose 1.01%, or 22 sen to RM21.98 and IJM Corp Bhd gained 2.63%, or five sen to RM1.95.

KLK has proposed to acquire a 56.2% stake in IJM Plantations held by IJM Corp for RM1.53bil cash or RM3.10 per share.

“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 (SPA) on or before 5pm on June 11,“ IJM Corp said.

Upon the execution of the SPA and the same becoming unconditional, KLK will be obliged to extend a mandatory general offer to acquire all the remaining IJM Plantation shares it does not already own for RM3.10 per share.

MIDF Research said the offer of RM3.10 per share values IJM Plantations at 19x PER -above its valuation of RM2.62 which is based on FY22 PER valuation of 16x (between the range of 14x-17x of its peers’ PE).

“The offer price translates to a valuation of RM1.53bil and if KLK extends the offer to all the remaining IJM Plantations shares, the offer price will translate to a valuation of RM2.7bil.

“We opine that this offer price is reasonable given the current CPO price which has breached RM4000 per tonne, which is also at an all-time high,” MIDF said.

“We think that the deal is fair for KLK to obtain a controlling stake in IJM Plantations (at 18% premium to our TP of RM2.62) and is more likely to appear attractive enough for IJM Plantations’s minorities to accept, should the deal progress to a mandatory offer for the rest of IJM Plantations’s shareholders,” it added.

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