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KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) is following in the footsteps of IOI Corp Bhd, with the proposed acquisition of an oleochemical plant in Germany for €60.5 million (RM251.51 million) as it seeks to expand its manufacturing capacity and product range in Europe.

KLK has proposed to acquire the entire interest in Uniqema GmbH & Co KG of Germany from the subsidiaries of London-listed specialty chemical company, Croda International plc.

“The proposed acquisition fits well with KLK’s resource-based oleochemical activities as it will be transformed into the business and distribution hub for KLK’s oleochemicals division in Europe,” it said yesterday.

KLK said yesterday it would be able to increase its overall manufacturing capacity and product range of fatty acids and glycerine. The acquisition will enable KLK to gain control of Uniqema’s oleochemical plant in Emmerich, Germany which has a capacity of 150,000 tonnes per year.

The acquisition of Uniqema’s plant in Germany was also part of the group’s plan to strengthen its oleochemical  business. In September 2007, KLK’s subsidiary, Palm-Oleo Sdn Bhd had acquired Uniqema Malaysia Sdn Bhd for RM67.67 million cash from Croda Overseas Holdings Ltd.

KLK said yesterday Uniqema’s production site was along the Rhine in Emmerich, close to key customers and raw materials supply routes. The site also has ample storage tanks and warehousing facilities, its own jetty and is well served by road and rail links.

KLK will finance its acquisition by cash reserves and bank borrowings. It expected the acquisition to generate overall benefits to the oleochemical business as Uniqema has a large established customer base.

To recap, in November 2002, larger rival IOI Corp Bhd acquired Netherland-based Loders Croklaan from the Unilever Group for RM813.9 million. Loders was the largest crude palm oil (CPO) refiner in Europe supplying specialty oils and fats and with a strong presence in the US and Europe.

An analyst at a bank-backed research house said KLK’s acquisition had a different product mix from IOI Corp’s Loders Croklaan.

“Loders is focused mainly on specialty oils and fats which are things such as cocoa butter equivalents and other edible products. As for Uniqema, there is no mention in the announcement other than oleochemicals which are non-edible and used to make things such as shampoo and soap,” she said.

She added the proposed price “looked fairly decent if you consider that Uniqema has working capital of €25.4 million.”

Adjusting for the working capital, the net price is roughly €35.1 million, which was not expensive for production capacity of 150,000 tonnes per annum.

In the absence of profit figures for Uniqema, the analyst said, the closest comparison available would be KLK’s 2007 acquisition of Uniqema (Malaysia) for RM67.67 million which had 100,000 tonnes production capacity.

The purchase price less working capital of RM17 million works out to RM50 million or about €12.67 million.

The analyst said given that the current acquisition was for production capacity of 150,000 tonnes per annum and that a premium was expected for a refinery in Europe, the price of Uniqema did not seem excessive.

Barring unforeseen circumstances, the acquisition is expected to be completed by the third quarter of calendar year 2010.


This article appeared in The Edge Financial Daily, May 11, 2010.

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