KUALA LUMPUR (Sept 21): United Plantations Bhd is acquiring seven pieces of agricultural land totalling 8,999.13 acres in Daerah Hilir Perak, together with palm oil mill, workers; living quarters and a site office, from Pinehill Pacific Bhd’s group of companies for RM413.57 million in cash.
The proposed acquisition is consistent with its growth plan to continue expanding its landbank, when good business opportunities arise, the group said.
“The Proposed Acquisitions are expected to increase the Group’s Malaysian plantation land bank by almost 10%, from approximately 40,821 ha to 44,463 ha, thereby increasing the total land bank of UP Group (including the Group’s land bank in Indonesia of 18,663 ha) to 63,126 ha, from the current 59,484 ha,” United Plantations said in a filing with the local bourse.
United Plantations had entered into three conditional sale and purchase agreements (SPA) with Pinehill Pacific Bhd group of companies, namely Pinehill Plantations (Malaysia) Sdn Bhd, Syarikat Kaum Melayu Hilir Perak Sdn Bhd and Tahir, Rozlan and Tasariff Sdn Bhd, for the acquisition of the lands, the filing added.
“The Proposed Acquisitions will not have any effect on the net asset and gearing of UP, as the Proposed Acquisitions will be satisfied entirely in cash and does not involve any issuance of new ordinary shares and borrowings in UP,” it said.
The group expects the proposed acquisition to contribute positively to its future earnings and earnings per share (EPS) in the medium to long term.
The proposed acquisition is expected to be completed by the first quarter of 2019.
Pinehill Pacific Bhd is currently listed on the main market of Bursa Malaysia. The proposed disposal provides an opportunity for the group to unlock and realise the value of its investments within its subsidiaries.
“Given the size, location, the remaining tenure and market value of the plantation assets, it is an opportunity for [us] to dispose the plantation assets to United Plantations Bhd,” Pinehill Pacific Bhd said in the filing, adding that the proposed disposal comes with an attractive offer that is in line with the group’s objective to enhance shareholder value.
Proceeds raised from the proposed disposal is expected to be utilised amongst others for repayment of borrowings, funding the group’s existing oil palm plantation business in Indonesia and its working capital.
Shares price of United Plantations rose two sen or 0.07% at RM27.50 at noon break today, giving it a market capitalisation of RM5.72 billion.
Meanwhile, trading in the shares of Pinehill Pacific was halted this morning and would resume at 2.30pm today. — theedgemarkets.com
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