KLK buying Sime Darby's Germany oleochemical assets

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KUALA LUMPUR (May 27): Kuala Lumpur Kepong Bhd (KLK) is buying Emery Oleochemical GmbH's assets in Germany in an all cash Euro 40.5 million (RM162 million) deal. Emery is a unit under Sime Darby Bhd (fundamental: 0.8; valuation: 1.4).

In a statement to Bursa Malaysia today, KLK (fundamental: 1; valuation: 1.1) said it had signed a conditional asset purchase agreement to buy Emery's plant, tangible assets and inventories.

KLK said the transaction would enable the company to "diversify into the tallow-based market". Tallow is a substance derived from animal fat.

KLK said the acquisition would also complement its existing fatty acid and glycerine business.

KLK said the transaction was scheduled for completion by the third quarter of this year.

According to KLK's announcement, Emery Oleochemicals (M) Sdn Bhd owns 100% of Emery Oleochemical GmbH via Emery Oleochemicals UK Ltd.

Emery Oleochemicals UK is equally owned by Sime Darby Plantation Sdn Bhd and PTT Chemical International Private Ltd.

In Malaysia, KLK shares fell 30 sen or 1.4% at 12.30pm to RM21.54 for a market value of RM22.94 billion.

A total of 308,000 shares changed hands.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)