KLK ups offer for MP Evans takeover bid

PETALING JAYA: Kuala Lumpur Kepong Bhd (KLK) has increased its initial offer for MP Evans Group PLC to 740 pence per MP Evans share, valuing it at about £415.4 million (RM2.25 billion), after shareholders of MP Evans spurned its previous offer.
In a filing with Bursa Malaysia yesterday, KLK said the increased offer is based on the strategic merit it still sees in synergising the operations of MP Evans with KLK’s from a geographical and capabilities perspective.
“The management of MP Evans will also have opportunities to develop their careers within the larger organisation.
Together, KLK and MP Evans should establish best practices for the further growth of both companies and enable the enlarged group to capitalise on economies of scale in the oil palm sector,” it said.
KLK said the increased offer represents a substantial premium of 74% to the closing price of 426.25 pence per MP Evans share on Oct 24, 2016 and 77% to the volume-weighted average closing price of 417.4 pence per MP Evans share for the 30 days ended on Oct 24, 2016.
It also represents a premium of 16% to the initial offer price of 640 pence per MP Evans share, which was announced on Oct 25, 2016 and subsequently rejected by shareholders of MP Evans.
KLK intends to finance the cash consideration through an amended acquisition loan facility provided by The Hongkong and Shanghai Banking Corp Limited and internal cash resources.
The increased offer will not have any effect on KLK’s share capital and shareholdings of KLK’s substantial shareholders.
If the increased offer is accepted, the KLK Group will see its gearing increase from RM4.6 billion to RM6.9 billion while gearing ratio will increase from 0.43 to 0.65 and net gearing ratio increase from 0.23 to 0.45.
Last month, KLK via its wholly owned subsidiary KL-Kepong International Ltd (KLKI) made a cash offer of 640 pence per MP Evans share to acquire the entire issued and to be issued share capital of MP Evans.
However, the proposed takeover of the UK-based plantation company hit a snag when the board of MP Evans said that 54.72% of its shareholders unequivocally support its stand to reject the deal. The shareholders had, within 24 hours of the offer’s announcement, confirmed their intention to reject the offer.
MP Evans said its board, having considered the offer together with its financial adviser Rothschild, is unhesitant in unanimously concluding that the offer by KLK is wholly inadequate and substantially undervalues the company, its unique position and its future growth potential.
Its chairman Peter Hadsley-Chaplin also said that the offer reflects neither the existing value of the group’s plantations nor the future value from its clearly defined strategy substantially to increase its planted hectarage.