KUALA LUMPUR: Indonesian planter MP Evans Group plc has rejected outright a revised takeover offer from Kuala Lumpur Kepong Bhd (KLK), just a few hours after the Malaysian plantation giant raised the offer price by about 16%, from 640 pence (RM34.42) apiece to 740 pence after its initial bid was turned down.
In a bourse filing, the London Stock Exchange (LSE)-listed MP Evans said its board has unanimously rejected KLK’s offer on the basis that it “very substantially undervalues the company, its unique position, and its future growth potential”.
MP Evans said it would make a further announcement in relation to the revised offer. Meanwhile, it “strongly urged” its shareholders to not take action in relation to the revised offer and not to sell their MP Evans shares. At press time, KLK has yet to respond to the latest rejection.
In an earlier filing, MP Evans told the LSE that the revised offer, which values the company at about £415.4 million, represents a premium of 74% to its closing price of 426.25 pence per share on Oct 24.
Separately, KLK, in a Bursa Malaysia filing earlier, reiterated that there is a strategic merit in synergising the operations of MP Evans with KLK’s from a geographical and capability perspectives.
“The management of MP Evans will have opportunities to develop their careers within the larger organisation. Together, KLK and MP Evans should establish best practices for the further growth of both companies and enable the enlarged group to capitalise on economies of scale in the oil palm sector,” it said.
Following the increased offer, KLK acknowledged that the group’s gearing is expected to rise from about RM4.6 billion to RM6.9 billion. Pursuant to the deal, it expects its gearing ratio to climb to 0.65 times from 0.43 times, while its net gearing ratio would rise to 0.45 times from 0.23 times.
The deal does not require KLK shareholders’ approval.
KLK needs to acquire control of over 50% equity interest in MP Evans for the revised bid to succeed. KLK intends to maintain the listing status of MP Evans if it holds less than 75% equity interest in the company.
“KLK continues to believe its all-cash increased offer is highly attractive for MP Evans shareholders, representing a compelling value proposition with a high degree of certainty at a substantial premium, and that it provides a significant opportunity for MP Evans shareholders to realise substantial value from their investment in the context of the low liquidity in the trading of MP Evans shares,” MP Evans said earlier.
To recap, KLK, via its wholly-owned subsidiary KL-Kepong International Ltd, announced a cash offer of 640 pence per share on Oct 25 to acquire MP Evans.
Two days later, MP Evans announced that 54.72% of its shareholders decided to not accept KLK’s £360.5 million cash offer for the company, which was deemed a hostile takeover.
“Shareholders holding a majority of the company’s share capital have already, within 24 hours of the offer’s announcement, confirmed their intention to reject the offer, supporting the board’s position. The offer therefore cannot succeed and will fail,” MP Evans chairman Peter Hadsley-Chaplin said in a statement on Oct 27.
MP Evans owns oil-palm plantations in Indonesia and residential property development in Malaysia. Its share price, which climbed by as much as 13.3% to 710 pence after the revised offer was announced, pared some gains and was trading at 675 pence after the board’s rejection.
KLK shares settled 16 sen or 0.68% higher on Bursa Malaysia at RM23.70 yesterday, which gave it a market capitalisation of RM25.24 billion.