KLK eyes bigger stake in Britain’s Synthomer

SINGAPORE: Plantation giant Kuala Lumpur Kepong Bhd (KLK) is considering raising its stake in British chemicals company Synthomer Plc as it looks to further expand its specialty chemicals business globally, two sources tell Reuters.

KLK is talking with at least one financial adviser to explore potentially boosting its 26.3% stake in Synthomer, said the sources with knowledge of the matter.

The stake purchase could comprise primary and secondary shares, the sources added, asking not to be identified because the information is private.

It is not immediately clear whether it will acquire a controlling stake.

The company is the largest shareholder of Synthomer, which has a market capitalisation of US$604.1mil (RM2.87bil), according to Refinitiv data.

The second biggest shareholder is UBS Asset Management (UK) with a 5.01% stake, followed by M&G Investment Management with 4.99%, the data show.

KLK declined to comment.

Synthomer did not respond to a request seeking comment outside of London working hours.

KLK is one of the largest oil palm and rubber plantation companies in Malaysia with a current market value of US$4.78bil (RM22.7bil), according to Refinitiv data.

The company has about 300,000 ha of planted area for both oil palm and rubber with the land bank spreading across Malaysia, Indonesia and Liberia, according to its website.

It diversified into resource-based manufacturing in the 1990s.

A larger stake could further expand KLK’s specialty chemicals business and raise the earnings contribution from Synthomer, the sources said.

The London-listed company contributed equity profit totalling RM260.6mil to KLK in the fiscal year ended Sept 30, 2021, according to the firm’s latest annual report.

Synthomer has been expanding aggressively with the aim of becoming a leading global supplier and maker of polymers.

Last year, Synthomer acquired the adhesive resin business of US-based Eastman Chemical Co for US$1bil (RM4.74bil).

Shares of Synthomer have dropped 71.6% in the year to date, Refinitiv data show. — Reuters