KUALA LUMPUR (Aug 24): Kuala Lumpur Kepong Bhd (KLK) has proposed to buy 739.2 million shares or 33% and one share in Boustead Plantations Bhd (BPlant) for a total of RM1.15 billion or RM1.55 per share and plans to take the company private via a mandatory general offer (MGO), confirming The Edge’s report.
KLK has entered into the tripartite strategic collaboration agreement (SCA) with Boustead Holdings Bhd (BHB) — which holds a 57.42% stake in BPlant — and Lembaga Tabung Angkatan Tentera (LTAT) — which holds a 10.59% stake in BPlant — on Thursday (Aug 24), the group said in a Bursa Malaysia filing.
At RM1.55, the offer is at a 19% premium to its net asset per share of RM1.30 as at March 31, 2023 and 13% premium to its closing price of RM1.37 on Wednesday.
The group said the objective of the SCA is to work together with BHB and LTAT towards the long term objective of enhancing the operational efficiencies and crude palm oil yields of the plantations of BPlant over the long term.
Barring any unforeseen circumstances, KLK assumed the proposed acquisition and proposed offer to be completed in the fourth quarter of 2023, which it believed will enhance the earnings and earnings per share of the KLK Group for the financial year ending Sept 30, 2024 (FY2024).
RHB Investment Bank Bhd has been appointed as the principal adviser to KLK for the proposed acquisition and proposed offer.
On the details, KLK said its shareholdings in BPlant will increase from nil to 33% and one share upon completion of the proposed acquisition, while BHB and LTAT will collectively retain their remaining equity interest of approximately 35% in BPlant.
BHB — involved in the property and industrial, plantation, heavy industries, pharmaceutical, trading and finance businesses — is a 98%-owned subsidiary of LTAT.
LTAT provides superannuation and other benefits for contributors made of retiring and retired personnel of the regular armed forces of Malaysia and designated members of the volunteer forces.
KLK said both BHB and LTAT shall be joint offerors with KLK, and the joint offerors will be obliged to extend a MGO to acquire all the remaining BPlant shares not already owned by them for a cash offer price of RM1.55 per BPlant share. The offer price values BPlant at RM3.47 billion.
The offer is triggered as a direct outcome of the acquisition by KLK as a result of the increase in the shareholding of KLK in BPlant, the group explained.
KLK said the purchase consideration and offer price were arrived at on a “willing-buyer willing-seller” basis after taking into consideration the latest audited consolidated net assets attributable to shareholders of BPlant as at Dec 31, 2022 of approximately RM2.97 billion or RM1.33 per BPlant share.
It also took account the historical closing prices of BPlant shares for one year up to Aug 23 of between 60.5 sen and RM1.37 and the price-to-book multiple and enterprise value over planted area multiple of public listed companies predominantly involved in oil palm plantation business.
“The purchase consideration and offer price will be funded via a combination of bank borrowings and internally generated funds, the proportion of which will be determined at a later date after taking into consideration, among others, the gearing and operating cash flow requirements of KLK and its subsidiaries,” said KLK.
It said that the deposit of RM130 million has been paid to BHB prior to the execution of the agreement and approximately RM99.2 million shall be paid to BHB within three business days.
KLK added that the balance of approximately RM916.6 million shall be settled by way of a direct business transaction on the completion date.
The group noted that it had a working relationship with BHB since 1986 through Applied Agricultural Resources Sdn Bhd, a joint venture company involved in agronomic advisory and research services as well as the commercial production of oil palm seeds and planting materials.
It said that Thursday’s SCA is expected to strengthen the existing cooperation between KLK and BHB and further provide the KLK Group with the long-term growth strategy for its plantation business.
BHB, LTAT gets first right of refusal on Balau and Bukit Mertajam estates
In a separate press statement, KLK said BHB and LTAT, under the SCA, 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 approximately 1,800 acres, for the purpose of development of the land hence providing added value to BHB.
LTAT chief executive officer (CEO) Datuk Ahmad Nazim Abd Rahman said: “This timely strategic 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.”
KLK CEO Tan Sri Lee Oi Hian said: “We are humbled to be entrusted as a partner to co-operate and deliver improvements to BPlant’s estates, in synergy with our own estates. We are optimistic that this corporate exercise will bring positive benefit for Malaysia’s palm oil industry as a whole.”
At the time of writing, the share price of BPlant, which had its trading suspended on Thursday, was at Wednesday’s closing price of RM1.37. Its share price has staged a strong rebound from a low of 64 sen on June 8 and more than doubled within three months to RM1.37, which was higher than its net assets per share of RM1.30 as at March 31, 2023.
KLK, on the other hand, has dropped 14 sen or 0.62% to RM22.36 during morning trade on Thursday, bringing it a market capitalisation of RM24.17 billion.