KUALA LUMPUR (July 29): Oil palm planter United Malacca Bhd (KL:UMCCA) is set to acquire full control of its Indonesian plantation subsidiary PT Lifere Agro Kapuas (LAK) in a US$10 million (RM42.25 million) deal to streamline its regional operations.

United Malacca currently has an effective interest of about 83% in LAK, held via its subsidiary International Natural Resources Pte Ltd (INR). United Malacca holds 88.2% in INR, which in turn owns 94.1% of LAK.

The acquisition involves purchasing the balance 17% effective interest in LAK from PT Bank OCBC NISP Tbk, an Indonesian-listed subsidiary of Singapore's Oversea-Chinese Banking Corporation (OCBC Singapore). This also makes it a related party transaction, as OCBC Singapore is a substantial shareholder of United Malacca.

The 17% stake it is buying comprises an 11.8% interest in INR and a direct 5.9% interest in LAK itself. LAK, incorporated in 2005, is primarily engaged in oil palm cultivation and milling activities in Central Kalimantan, Indonesia. The plantation has been a key contributor to United Malacca’s regional footprint.

United Malacca, along with its wholly-owned Vintage Plantations Sdn Bhd, has inked a share purchase agreement with PT Bank OCBC for the stake buy, as stated in its Tuesday exchange filing. 

At the same time, because LAK might have some old tax liabilities yet to be settled, OCBC has agreed to set aside US$1.1 million into a special holding account. This money or escrow fund will remain there until the Indonesian tax court decides exactly how much LAK owes. Once that is decided, this fund will be used to pay those old taxes.

United Malacca said the acquisition will be entirely funded by internal funds. As of end-April 2025, its cash reserves amounted to RM99.73 million, while short-term borrowings stood at RM60.44 million.

"The proposed transaction is in line with United Malacca’s long-term strategy to focus its financial resources on further expanding its plantation operations, both domestically and regionally," the company said. It added that achieving "100% control of the subsidiaries" could lead to cost savings through streamlined operations, faster decision-making, improved resources allocation and enhanced profitability.

The group's audit committee is of the opinion that the transaction is “fair, reasonable and in the best interest of the group”, was conducted at arm’s length, and not detrimental to minority shareholders.

Shares in United Malacca closed down five sen or 0.97% to RM5.20 on Tuesday, giving the group a market capitalisation of RM1.09 billion.