‘PNG govt intends to hold up to 30% stake in NBPOL’

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KUALA LUMPUR: Sime Darby Bhd, which is paying a hefty premium price to take over New Britain Palm Oil Ltd (NBPOL), welcomes the Papua New Guinea (PNG) government’s intention to raise its stake in the plantation company, said its president and group chief executive Tan Sri Mohd Bakke Salleh.

“That is their [PNG’s] preference right now. That’s what they’ve expressed to us and it’s good because definitely we would like to work with the authority and PNG government to grow the business,” Bakke told the media after Sime Darby’s annual general meeting yesterday.

Sime Darby in October launched a takeover offer for the entire 100% stake in London-listed NBPOL for £1.07 billion (about RM5.6 billion) or £7.15 per share, which is at a 85% premium to the market price. The takeover offer is conditional upon Sime Darby receiving not less than 51% of the voting rights in NBPOL.

The takeover offer came after Sime Darby received the greenlight from the PNG government to acquire a 49% stake in NBPOL from Kulim (M) Bhd.

Bakke said, ideally, Sime Darby would want to own a controlling 51% stake in NBPOL.

“We will work out something after we’ve acquired our stake. The process requires us to make the general offer to all shareholders [now]. If all of them accept the offer, then we will have 100% stake. But subsequently, we will have to do something,” said Bakke.

Asked on whether the stake in NBPOL will be split 70:30 between Sime Darby and the PNG government after the takeover offer, Bakke replied, “Only God knows at this stage.”

At this junction, it is not clear if NBPOL will remain as a listed entity depending on the acceptance of the offer. Also it remains to be seen how the PNG government would raise its stake in NBPOL.

The takeover offer will close by Dec 19 this year.

The hefty premium price has raised some eyebrows in the investing fraternity.

NBPOL produces palm oil in PNG and the Solomon Islands. It has 77,000ha of oil palm plantation, 12 palm oil mills and one refinery each in PNG and Liverpool in the United Kingdom.

The plantation firm is also the largest sugar and beef producer in PNG through its over 7,718ha of sugar cane plantations and 9,282ha of grazing pastures. It also has seed production and palm breeding facilities.

Meanwhile, Bakke said the spin-off listing of its automotive arm, Sime Darby Motors Sdn Bhd, in the first half of 2015 is still a work in progress.

“We are still working on it,” he said.

Citing anonymous sources, Bloomberg in August this year reported that Sime Darby Motors plans to raise up to US$900 million (RM3 billion) in the initial public offering.

Sime Darby has an active interest in five primary sectors, namely plantation, industrial, motors, property, as well as energy and utilities.

Shares in Sime Darby dropped one sen to close at RM9.60 yesterday, giving it a market capitalisation of RM58.21 billion.


This article first appeared in The Edge Financial Daily, on November 14, 2014.