KUALA LUMPUR: Sime Darby Bhd deems as fair the offer price of £7.15 per share or £1.07 billion (RM5.6 billion) in its general offer to shareholders of New Britain Palm Oil Limited (NBPOL).
The offer is at an 85% premium to NBPOL's last closing price on the London Stock Exchange (LSE), but Sime Darby thinks NBPOL’s current share price “is not an appropriate benchmark” as it does not reflect the underlying value of its business.
"The offer price may appear to be high, but due to the illiquid nature of NBPOL's shares on both the LSE and the main market of the PNG's Port Moresby Stock Exchange (with less than 1% traded daily), it does not fully reflect the underlying value of its business," Sime Darby President and Group Chief Executive Tan Sri Mohd Bakke Salleh told a media briefing today on the proposed acquisition by the group’s plantation arm, Sime Darby Plantation Sdn Bhd.
"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 the deal," he added.
Sime Darby said Kulim Bhd proposed partial offer for 20% - at £5.50 per share - of NBPOL last year was not successful because the Independent Board of NBPOL had viewed the fair value of NBPOL at between £6.50 and £7.00 per share when it was evaluating Kulim's offer in August last year, and this had “set the expectation” of NBPOL’s shareholders.
Sime Darby’s current offer price represents a 30% premium to the original offer price of Kulim's proposed partial offer, and a 2%-10% premium to the fair value of NBPOL; it also values NBPOL at about RM84,000 on an Enterprise Value per hectare.
"We expect the transaction to be earnings per share (EPS) accretive of 4%-5% in the next two years," said Mohd Bakke, adding that he believes the EPS accretion will be more beyond that as Sime Darby Plantation takes NBPOL further to the next level.
Mohd Bakke said Sime Darby Plantation intends to delist NBPOL from the LSE and to keep the listing on Papua New Guinea’s (PNG) stock exchange, and then re-list it therafter either on Bursa Malaysia or the Singapore Stock Exchange.
The offer is conditional upon Sime Darby Plantation obtaining minimum 51% acceptance of NBPOL shares. As at June 30, Kulim owns 49% in NBPOL, the PNG government and other interests hold 22%, institutional and retail investors have 24%, while the NBPOL management has the remaining 5%.