Thursday 28 Mar 2024
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KUALA LUMPUR (Dec 7): In a move seen as another snub to Kuala Lumpur Kepong Bhd's offer to acquire the company, UK-based MP Evans Group Plc said it is planning to sell its entire interest in its joint-venture firm PT Agro Muko for US$100 million.

In a press statement, MP Evans' board said the company has inked a conditional agreement to sell its stake in the Indonesian planter to its long-standing partner, the Belgian Sipef Group. Sipef holds 47.29% in Pt Agro Muko, whose planter's oil palm and rubber project in Bengkulu Province, Sumatra, extends to some 19,500 planted hectares.
 
If the sale goes through, MP Evans plans to pay a special dividend of 10 pence per share to its shareholders. The deal is subject to shareholders' approval at a general meeting to be convened, besides some statutory Indonesian approvals.

"The group has held its investment since the project was first developed in the late 1980s. The total sale consideration amounts to US$13,860 per planted hectare, being the relevant share of PT Agro Muko's net current assets, plus a figure of US$13,000 per planted hectare," said MP Evans.

It said the price was in line with the independent valuation commissioned by the company, which had valued its assets at US$13,100 per planted hectare and provided further reason to reject KLK's offer. The report was released on Nov 25, following KLK's offer on Nov 18 to acquire MP Evans at 740 pence per share.

"The fact that a sale has been achieved at this level supports the independent valuer's valuation not only of PT Agro Muko but also of the group's other Indonesian assets. Based on the independent valuer's report, MP Evans commands a value of £10.82 per share, compared with the KLK offer of £7.40 per share, and the board is therefore urging shareholders to reject the offer," it said.

PT Agro Muko’s valuation, it added, was at the lower end of the independent valuer's range of values per hectare, relative to other MP Evan estates (both majority- and minority-held) in view of the project's older average age of planting and because approximately 9% of its planted area comprises rubber, which is typically less profitable than oil palm.

Meanwhile, it said it is now actively reviewing a prospective investment in a new, developed oil-palm project to replace the equivalent of the 7,200 hectares it is planning to give up in PT Agro Muko.

Further, it said it is “at an advanced stage in negotiations” to buy two projects near its existing East Kalimantan project, which will bring the size of that project from some 15,000 hectares, to closer to its desired target of 20,000 hectares.

"This will result in the group owning what the board considers to be two optimally sized oil palm areas of 10,000 hectares and two optimally sized crude palm oil mills," it added.

On completion of PT Agro Muko's sale, MP Evans said its sole remaining minority investment in the Indonesian palm-oil sector will be its 38% share of PT Kerasaan, comprising 2,300 planted hectares, which is majority-owned and managed by Sipef.

"It is planned in due course for the group to sell this investment and similarly reinvest the proceeds in additional, directly owned and managed hectarage," it added.

To recap, KLK, via its wholly-owned subsidiary KL-Kepong International Ltd, initially announced a cash offer of 640 pence per share on Oct 25 to acquire MP Evans.

Two days later, MP Evans announced that 54.72% of its shareholders decided not to accept KLK's £360.5 million cash offer for the company, which was deemed a hostile takeover.

KLK then revised the offer to 740 pence per share, which valued MP Evans at £415.4 million, a premium of 74% to its closing price of 426.25 pence per share on Oct 24.

MP Evans’ board, however, rejected the sweetened deal outright and later said it had received support of certain shareholders with a 40.85% stake, whose intention was not to accept the increased offer.

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