Hap Seng to acquire 55% of Kretam for RM1.18b

KUALA LUMPUR: Hap Seng Plantations Holdings Bhd proposes to acquire a 55% stake in Kretam Holdings Bhd for RM1.18 billion or 92 sen per share, triggering the 33% mandatory takeover offer threshold.
Hap Seng told Bursa Malaysia today that it had on Feb 21 entered into conditional share sale agreements with Kretam CEO Datuk Lim Nyuk Sang @ Freddie Lim and Santraprise Sdn Bhd for the acquisition of 33.5% and 21.5% equity interest in Kretam for RM716.99 million and RM460.79 million, respectively.
Lim’s direct shareholding in Kretam will be reduced to 15.3% after the completion of the deal.
The 92 sen offer represents a premium of 11.1% to Hap Seng’s five-day weighted average market price of 83 sen.
Hap Seng intends to maintain the listing status of Kretam, which is involved in the cultivation of oil palm, milling and sale of oil palm products, refining of palm oil, manufacturing of biofuels as well as manufacturing and sale of fertilisers.
As at Dec 31, 2016, Kretam had a total landbank of 23,865ha in Sandakan, Tawau and Lahad Datu.
With the acquisition, Hap Seng’s total plantation landbank and planted area is expected to increase by 23,865ha or 59.2% and 19,623ha or 54.3% respectively.
Given Kretam’s existing refinery capacity of about 1,500 tonnes per day, the proposed acquisition will enable Hap Seng to venture downstream into the production and sale of edible oils, extending its value chain.
Trading in Hap Seng and Kretam shares was suspended today pending the announcement of the proposed acquisition.