Kulim intends to accept Sime Darby's NBPOL buy

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KUALA LUMPUR (Oct 9): Kulim (M) Bhd intends to accept the offer by Sime Darby Bhd’s plantation unit, Sime Plantation Sdn Bhd, to acquire its 49% stake in Papua New Guinea-based (PNG) New Britain Palm Oil Ltd (NBPOL).

In a filing with Bursa Malaysia this evening, Kulim said its acceptance is subject to "there being no superior offer" and its shareholders’ approval.

If accepted, Kulim will be disposing its entire stake in NBPOL, comprising 73.4 million shares, at an offer price of £7.15 per share for £525.40 million or RM2.75 billion.

It added that it update shareholders on its intentions once it has received the formal offer from Sime Darby Plantation.

The announcement also came attached with a copy of NBPOL’s statement, dated the same day, where NBPOL chairman Antonio Monteiro de Castro said the offer will provide an opportunity for all shareholders to realise their investment in NBPOL at an attractive valuation.

"We also believe it represents a positive outcome for our employees, our customers and other stakeholders. By joining the Sime Darby Group (following the successful completion of the offer), NBPOL will benefit from having a strong, supportive partner to drive future expansion and growth in PNG and internationally," he said in statement.

At a briefing earlier today, Sime Darby president and group CEO Tan Sri Mohd Bakke Salleh said the group's offer price was fair, despite its 85% premium to NBPOL's last closing price, as Sime Darby felt its share price did not "reflect the underlying value of its business".

"It is not often that an opportunity such as this presents itself. The strategic fit between NBPOL and Sime Darby Plantation is the key factor that will ensure the success of this deal," he said.

Mohd Bakke also said Sime Darby Plantation intends to delist NBPOL from the London Stock Exchange and to keep the listing on PNG's Port Moresby Stock Exchange, and re-listing it later on either Bursa Malaysia or the Singapore Stock Exchange.

In a note today, AmResearch said it views the proposed acquisition negatively as "the valuation is at the upper range and would be value dilutive to the group".

"Sime Darby’s cash offer of GBP7.15/share for a total of RM5.6bil values the latter at 22x PE FY15F earnings based on Bloomberg estimates. Sime Darby itself is currently trading at only 14x FY15F earnings," said AmResearch.