KLK proposes RM1.15bil acquisition of 33% stake in Boustead Plantations

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) has proposed to acquire 739.2 million shares in Boustead Plantations Bhd, representing 33% and one share of the total issued shares of the plantations firm from Boustead Holdings Bhd (BHB) for RM1.15bil (RM1.55 per share), which values the company at RM3.47bil.

BHB currently has a 57.42% stake in Boustead Plantations while Lembaga Tabung Angkatan Tentera (LTAT) holds a 10.59% stake in the company. BHB and LTAT will be left with an equity interest of about 35% in Boustead Plantations following the proposed acquisition.

KLK said in a filing with Bursa Malaysia the acquisition is part of a strategic collaboration between the parties to enhance the operational efficiencies and crude palm oils (CPO) of Boustead Plantations over the long term.

It said it would fund the purchase consideration via a combination of bank borrowings and internally generated funds.

As a result of the acquisition, LTAT, BHB, and KLK will undertake a mandatory take-over offer to acquire all the remaining Boustead Plantations shares not already owned by the joint offerers at an equal cash offer of RM1.55 per share.

In a joint statement, the parties said they have entered into a tripartite strategic collaboration, whose objective is to enhance the long-term operational efficiencies and crude palm oil yields of Boustead Plantations' plantations for the mutual benefit of the parties.

"This collaboration is expected to contribute positively to Boustead Plantation's financial position over the long term," it said.

Under the value-creation exercise of the collaboration, BHB and LTAT are granted the first right of refusal to deal with two plantation estates, namely Balau and Bukit Mertajam (Mayfield Division) estates, with a total acreage of about 1,800 acres.

According to the statement, this was for the purpose of developing the land, hence providing added value to BHB.

LTAT chief executive Datuk Nazim Rahman said the the collaboration marks the beginning of the Reset strategy for BHB, which will result in significant value enhancement to the group.

"We firmly believe that this strategic collaboration with its synergies will unlock greater value for all stakeholders within the business value chain. We are confident that this will put both BHB and LTAT on a firm footing towards a sustainable future,” he said

Meanwhile, KLK CEO Tan Sri Lee Oi Hian said the collaboration will serve as a boost to the long-term growth strategy of the group's plantation business.

"We are optimistic that this corporate exercise will bring positive benefit for Malaysia’s palm oil industry as a whole,” he said.