KUALA LUMPUR (Jun 14): Hap Seng Plantations Holdings Bhd’s plan to acquire a 55% stake in Kretam Holdings Bhd for RM1.18 billion has fallen through.

Hap Seng Plantations said it decided not to proceed with the deal after it found the results of the due diligence of Kretam to be “unsatisfactory and unacceptable”.

Accordingly, it said it has exercised its right to terminate the share sale agreements with immediate effect, with which the group will not extend the proposed mandatory general offer for all the remaining Kretam shares not included in the deal, for a cash consideration of 92 sen per share.

In February, Hap Seng Plantations announced its intention to acquire the 55% stake in Kretam, comprising 1.28 billion shares, at 92 sen per share in cash.

The group said the acquisition will trigger a mandatory general offer for the remaining shares in Kretam, but that it intends to maintain the listing status of Kretam.

The deal involved buying a 33.5% of stake from Kretam's largest shareholder, Datuk Lim Nyuk Sang @ Freddie Lim, for RM716.99 million, and another 21.5%  from Santraprise Sdn Bhd for RM460.79 million.

In its filing to Bursa Malaysia, Kretam said it has been informed by Lim, who is also the group’s executive director-cum- chief executive officer, that Hap Seng Plantations had decided to terminate the conditional share sale agreements with him and Santraprise.

Hap Seng Plantations share price fell seven sen or 2.97% to RM2.29 today, giving it a market capitalisation of RM1.83 billion.

Kretam saw its share price fall 0.5 sen or 0.71% to 69.5 sen, valuing the group at RM1.62 billion.