Jumping on the bandwagon” might be an apt phrase to describe some companies, though perhaps not 110-year-old planter-builder Kuala Lumpur Kepong (KLK).

The current merger and acquisition frenzy remains a largely American and Chinese domain for now, so for Malaysia’s third-largest planter to show its cards in a RM1.8 billion all-cash and hostile offer for a quiet British planter named MP Evans was a bolt from the blue.

Beyond the appeal of MP Evans’ Indonesian palm/rubber acreage and Malaysian property assets (analysts: “cheap-ish”), the headline reason for the raid must surely be a hugely attractive ringgit/sterling cross.

At today’s levels of RM5.05 to £1, the local currency has never been cheaper, at least on a 10-year basis to the pound. Hence, this latest chapter of Malaysian corporations cherry-picking British assets.

For critics and detractors of Britain’s exit from the European Union, this flood of money from cashed-up foreigners must be a welcome respite.

According to the Financial Times, Americans living in the UK have taken advantage of the pound’s 31-year-low against the dollar to shift wads of cash to the UK in search of investment and property bargains.

The dollar inflows have also been helped along in no small measure by the possibility, however small, of Donald Trump’s victory in the November US presidential elections, for Americans desiring the comparative stability of a British economy and Conservative government. Might this fear also have been a reason for KLK’s decision?

Like the US, our little nation is also navigating its own treacherous crosscurrents.

From the possible imposition of religiously motivated legislation, perceived curtailment of political and civil liberties and a gradual but inexorable diminution of economic competitiveness, foreign investment — especially when paired with attractive valuations and a lenient currency cross rate — must not only be an irresistible proposition, but also a legit and potentially lucrative method of capital flight.

 At current levels, the ringgit is at a near 10-year low to the global US dollar benchmark, and the trend this past decade has only been in one direction: South.

Structurally, Malaysia has yet to convince investors of its ability to (a) control its debt addiction; 

(b) improve public governance; (c) diversify meaningfully away from volatile energy markets; and (d) ensure the quality and rigidity of vital institutions like its education and judicial systems.

All of which is anathema to the foreign investor since it drives up costs, raises unwanted uncertainty and makes life potentially difficult for expat families and their children.

The resultant loss of productivity, investment and vitality has henceforth led to the ringgit’s decline and current position.

Put another way, if one were a banker worth his salt, the UK would offer a rich vein of deal-origination ideas right now.

And in all likelihood, KLK (like all soundly managed businesses constantly seeking to hedge risks in their operational areas) would have been quietly sifting through deal ideas these past few years.

The Black Swan event of Brexit was therefore dark only for Brits in the “For” camp.

For the rest of the world, however — especially those with a couple of spare pennies — the  development has been anything but negative.

Since June 23, when the British cast their fateful vote, KLK’s move for MP Evans has been both preceded and dwarfed by deals like Softbank’s £24.3 billion move for British tech firm ARM Holdings.

Ditto South African retailer Steinhoff International Holdings’ move for British discount chain Poundland Group PLC, and possibly broadcaster ITV, chip designer Imagination Technologies Group and software company Aveva Group, all of whom had previously been rumoured to be in the takeover frame, if Dow Jones’ Marketwatch website is to be believed.

So, back to KLK.

MP Evans’ executive chairman Peter Hadsley-Chaplin and CEO Tristan Price might have rebuffed KLK’s earlier offer.

But what’s to stop KLK from upping its offer?

Certainly, with the currency on its side, and some RM2.1 billion in cash, cash equivalents and short-term funds as at June, it’s not short of a penny or two.

Nor does it preclude it from funding part of the deal in stock. Not after a 6.5% return on a one-year basis, which aligns nicely to the 43% gain in CPO prices on the same timescale, thank you very much.

Nor is KLK a newbie to the M&A games, which also means it has been there, bought the t-shirt and watched the video when it comes to foreign acquisitions.

Certainly, KLK’s Australian cattle/cereal, German, Dutch, Swiss, Belgian, Indonesian and German manufacturing and palm holdings suggest the Lee family are neither averse nor strangers to international mergers and acquisitions.

In plumping for the assets of MP Evans, an even older company at 146 years old, KLK is in some ways returning to its roots, since its founding as Kuala Lumpur Rubber Company Ltd in 1906 in London with a reported acreage of some 600ha in rubber and coffee plantations in the-then Malaya.

A year later in 1907, KLR was listed on the London Stock Exchange. More than a century later, here it still is, bright and bushy tailed, making waves.

One more thing, and it is an ironic one.

I don’t believe for one second that our biggest GLCs don’t already have a stack of viable and attractive British acquisition targets for board consideration.

But the missive from above is clear, and has been for some time.

Which is to say, for the sake of the ringgit, investment must be domestic.

And so for the reasons cited above and just aforementioned, foreign M&A probably/currently remains the domain of truly private-sector companies, which are exalting in record-low pound sterling levels.

Such are the times we find ourselves in.

Khoo Hsu Chuang is contributing editor at The Edge Malaysia

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