KUALA LUMPUR (Aug 26): KUB Malaysia Bhd (KL:KUB) is disposing of a 70% stake in its indirect wholly owned subsidiary KUB Sepadu Sdn Bhd (KUBS), the sole contributor to the group's agro division, for RM103.37 million in cash.

The expected pro forma gain on disposal is RM19.65 million.

According to a bourse filing on Monday, KUBS is principally involved in the cultivation of oil palm and management of oil palm estates. The company is the owner of two oil palm estates in Sarawak, measuring in aggregate 4,614.53 hectares.

KUB said the 70% stake will be sold to Sinong Enterprise Sdn Bhd, which has subsidiaries principally involved in oil palm plantation and swiftlet ranching.

According to KUB, KUBS currently has limited scale of operations with the majority of the oil palms within its estates having an ageing profile of more than 19 years.

As such, the estates will require capital expenditure and infrastructure costs for clearing and replanting programmes in the coming years.

"Given the financial resources required to be invested in the agro division, the board is of the view that the proposed disposal is a viable proposal for the group to partially realise its investments in KUBS estates and limit the required financial resources for the upkeep and maintenance of KUBS estates going forward," KUB said.

KUB added that the proceeds from the proposed disposal will be allocated for its other core businesses, namely the liquefied petroleum gas (LPG) division, which is involved in the importation, bottling and trading of LPG, as well as the power division with its newly acquired power cables and wires manufacturing business.

"The group also intends to use part of the proceeds for its business expansion including but not limited to potential acquisitions or investments in similar or other complementary businesses/assets," the group said.   

It expects the disposal to be completed by the second quarter of 2025.

Following the conclusion of a mandatory general offer in March, JAG Capital Holdings Bhd — controlled by Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani with a 98.75% stake — increased its shareholding in KUB to 62.72%.

JAG previously stated that it does not intend to maintain KUB’s listing status if it secures 90% of all KUB shares, but would keep KUB listed if it secures between 75% and 90%.

Shares in KUB closed one sen or 1.34% higher at 75.5 sen on Monday, valuing the group at RM417.67 million.