KUALA LUMPUR (Oct 13): Oriental Holdings Bhd (OHB) is planning to acquire the remaining shares in three plantation companies, namely Selasih Permata Sdn Bhd (SPSB); Oriental Boon Siew (Mauritius) Pte Ltd, or OBS (M); and Southern Perak Plantations Sdn Bhd (SPP), for a total of RM802.26 million.
The conglomerate has inked two agreements with Boon Siew Sdn Bhd (BSSB) to buy the remaining 49.5% stake in SPSB and OBS (M) respectively, and another agreement with BSSB, Boon Siew Development Sdn Bhd (BSD) and Loh Boon Siew Holdings Sdn Bhd (LBS) collectively, to acquire the remaining 60.5% stake in SPP, according to a bourse filing.
Prior to this proposal, Oriental held a 50.5% stake in SPSB and OBS (M) respectively, and a 39.5% stake in SPP. Both SPSB and OBS (M) are Indonesian-based companies, while SPP is located in Perak.
Simultaneously, with the proposed share acquisitions, OHB also signed agreements with Boontong Estates Sdn Bhd (BESB) to acquire three oil palm plantation estates — measuring a total of 3,450.35 hectares (ha) in Penang, Pahang and Kedah — amounting to RM397.1 million.
The total aggregate purchase consideration for the above proposal of shares and land acquisitions amount to RM1.2 billion.
All these proposals are deemed as related party transactions. The stockholders and directors in BSSB, BESB and BSD are the directors of OHB. They are OHB’s executive chairman Datuk Loh Kian Chong, managing directors Datuk Robert Wong Lum Kong and Datuk Seri Lim Su Tong, executive directors Tan Kweng Hwee and Datuk Seri Wira Tan Hui Jing, and alternate director Datin Loh Ean.
OHB has multiple core businesses which include automotive, plantation and property investments, of which plantation contributed approximately 9.82%, 16.04% and 25.38% to the group’s total revenue for FY19, FY20 and FY21 ended Dec 31, respectively.
OHB said the plantation segment will continue as a core and consistent contributor to the group, adding that the proposals are in line with its strategy to acquire resilient earnings.
“Overall, the total plantation land bank consolidated and owned by the group will increase from approximately 101,126 ha as at the latest practicable date (LPD) to approximately 108,221 ha upon completion of the proposals, with the total planted area increasing from approximately 42,008 ha as at the LPD to approximately 48,463 ha.
“The increase in OHB group’s plantation hectarage pursuant to the proposals will increase the group’s presence in the oil palm cultivation business in Malaysia and Indonesia.
“The maturity of the plantation on the estates to be acquired is expected to contribute positively to the profitability of OHB group over the medium- to long term,” OHB explained.
Moving forward, OHB said the group’s outlook will largely depend on the prospects of the oil palm industry and its ability to manage, sustain and improve its plantation operations and fresh fruit bunches (FFB) yields.
“In addition, OHB group will continue developing the unplanted land area in both the Indonesian and Malaysian estates in a sustainable and orderly manner, to optimise the group’s financial performance and achieve economies of scale.
“As Malaysia and Indonesia are expected to continue being the two largest global exporters of crude palm oil (CPO) and palm oil products globally, the board is of the view that the proposals bode well for the group and serve to strengthen OHB’s plantation footprint in the region,” OHB added.
Barring any unforeseen circumstances, the proposed share acquisitions are envisaged to be completed by the first quarter of 2023, and the proposed land acquisitions to be completed in the first half of 2023.
OHB shares finished one sen or 0.16% lower to close at RM6.39 on Thursday, for a market capitalisation of RM3.96 billion.