KUALA LUMPUR (Jan 11): Ta Ann Holdings Bhd has proposed to acquire a 30.1% stake in Sarawak Plantation Bhd for RM169.9 million or RM2 a share.

The group said the acquisition of the stake from Cermat Ceria Sdn Bhd is in line with its plan to further expand its oil palm plantation business and gain larger market access in Sarawak.

"Taking into consideration the scarcity of sizeable and suitable oil palm plantation land in Sarawak, the proposed acquisition represents a strategic investment by the company," Ta Ann said in a filing with Bursa Malaysia.

The group said the oil palm age profile of Sarawak Plantation is relatively young with about 41% immature and young mature and 50% prime mature.

"Accordingly, as the oil palm enters into maturity as well as move into higher yielding age bracket, Sarawak Plantation's oil palm yields are poised to further improve and the growth momentum in Sarawak Plantation's earnings is expected to continue in the future financial years," it said.

Ta Ann said the purchase consideration represents a premium of 11.5%, 10.1%, 13.8% and 17.2% to the five-day, one-month, three-month and six-month volume weighted average price (VWAP) of Sarawak Plantation shares up to the date preceding the announcement of RM1.79, RM1.82, RM1.75 and RM1.71 respectively.

The purchase consideration, the group added, implied a price-earnings ratio (PE) of 16.5 times, which is comparable to the average PE of comparable companies of 15.91 times.

Ta Ann said the group will use internally generated funds and bank borrowings to pay for the stake buy.

It said the acquisition is deemed a related party transaction as the group's executive chairman and major shareholder with 7.3% direct and 27.8% indirect interest, Datuk Amar Abdul Hamed Sepawi, is also the controlling shareholder of Cermat Ceria.

Ta Ann's share price fell 0.57% to settle at RM3.51, giving it a market capitalisation of RM1.56 billion. Sarawak Plantation rose 2.3% to close at RM1.80 for a market capitalisation of RM503.2 million.