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Lee Oi Hian is the chief executive officer of Kuala Lumpur Kepong. Bhd.
Goh Seng Chong/Bloomberg
Malaysian palm oil giant Kuala Lumpur Kepong, controlled by billionaire brothers Oi Hian & Hau Hian Lee, on Wednesday announced that it has offered to buy IJM Corp.’s entire 56.2% stake in IJM Plantations for 1.53 billion ringgit ($372 million), consolidating its palm oil interest as the price of the commodity surges.
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KL Kepong is offering 3.10 ringgit for each IJM Plantation share, a 26% premium to IJM Plantation’s last traded price before trading was suspended the day before the announcement.
IJM Corp., which has interests in real estate, construction and infrastructure, said in a filing to Bursa Malaysia that its board has agreed in principle to finalize the terms of the offer by Friday, the deadline set by KL Kepong for IJM Corp to accept the offer.
The IJM Corp. offices in Kuala Lumpur, Malaysia.
Charles Pertwee/Bloomberg
Under Bursa Malaysia’s listing rules, KL Kepong will have to make a mandatory offer to buy the rest of IJM Plantations at the same price once IJM Corp. accepts the offer. That will cost KL Kepong another 1.2 billion ringgit, which is about $291 million. The deal is subject to shareholder and regulatory approvals.
The acquisition comes on the heels of a rally in palm oil, with the benchmark palm oil contract traded on Bursa Malaysia touching a record high of 4,524 ringgit per tonne in May, after surging more than 70% in the past 12 months amid a global supply crunch for edible oils.
Malaysia has been one of the leading producers of palm oil worldwide, with millions of hectares of … [+]
TENGKU BAHAR/AFP via Getty Images
KL Kepong’s net profit jumped 335% year-on-year to 847.8 million ringgit in the six months ended March 31, bolstered by robust palm oil prices. The company said it expects the group’s profit for the full year to be “significantly higher,” as palm oil prices remain buoyant underpinned by tight palm oil inventories.
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Batu Kawan, which is controlled by the Lee brothers, is the largest shareholder of KL Kepong. It has interest in plantations, real estate, transportation and chemical manufacturing. With a net worth of $1.15 billion, the brothers were ranked No. 19 in the Malaysia rich list published in early June.