Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 10): IOI Corp Bhd is acquiring two oleochemical product production plants in Germany for RM433.3 million cash. 
 
In a filing with Bursa Malaysia today, the plantation giant said the two oleochemical business’ production facilities are located at Arthur-Imhausen-Strasse (Witten Plant) and Zur Hafenspitze (Wittenberge plant) in Germany respectively. 
 
IOI Corp got into the deal through its indirect wholly owned subsidiary, Alstersee 217 VV GmbH (Alstersee). The latter had on yesterday entered into a conditional asset purchase agreement (APA) with Cremer Oleo GmbH & Co KG (Cremer), for the proposed acquisition. 
 
The APA entails in Alstersee, which is to be renamed as IOI Oleo GmbH in the future, to acquire Cremer’s entire oleochemicals business for EUR89.4 million (RM433.3 million). 
 
The purchase consideration is subject to the terms and conditions contained in the APA. 
 
It said in the filing, the production plant in Witten offers a broad array of mostly branded oleochemical speciality products for the pharmaceutical, cosmetic, food and performance chemicals markets worldwide. 
 
While the Wittenberge plant provides high performance capacities for esterification with multi-step short-path distillation, distillation and fractionation of fatty acids and production of medium-chain triglycerides," it added. 
 
Both plants, IOI Corp said, combined offer a processing capacity of approximately 39,200 metric tonnes per annum. 
 
IOI Corp pointed out no independent valuation was carried out on the real estates. 
 
It said the purchase consideration was arrived based on willing buyer-willing seller basis after considering the fixed and intangible assets valuation, the latest available book value of inventories, trade receivables and deducting retirement benefits and other employee related provisions. 
 
The net book value of the assets (net of liabilities) based on the latest audited financial statements for the financial year ended Dec 31, 2014 was EUR90.3 million (RM442.84 million), the filing stated.
 
"The land was free from encumbrances," it added. 
 
On rationale, IOI Corp said the acquisition is a timely and synergistic opportunity for the group to move further up the value chain with an investment in more specialised downstream oleochemical manufacturing business. 
 
The new facilities will also enable its oleochemicals division to expand into a new product range to serve the higher margin but difficult to penetrate pharmaceutical, cosmetic, food and performance chemicals markets worldwide, it said. 
 
"It will also establish new production sites in the centre of the European Union (EU), taking advantage of close proximity to key markets in Western Europe and emerging ones in Eastern Europe. 
 
"In addition, this also mitigates the increased import tariff on Malaysian oleochemical products into EU post Generalised Scheme of Preferences (GSP) withdrawal in 2014," it said. 
 
Barring any unforeseen circumstances and subject to the fulfillment of all conditions precedent stated in the APA, the group targets the proposed acquisition to be completed by the first quarter of calendar year 2016.
 
Shares in IOI Corp rose five sen or 1.28% to settle at RM3.95 as at midday break today, after 1.67 million shares changing hands. 
 
The current price gives it a market capitalisation of RM24.52 billion. 
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