Boustead Plantations Berhad (BPB) moved further towards the expansion of its land bank today as it entered into a sales and purchase agreement for the acquisition of 42 parcels of land amounting to a total of approximately 11,600 hectares, located within the district of Labuk and Sugut, Sabah.
The purchase consideration for the land is RM750 million, derived at on a willing-buyer willing-seller basis after taking into consideration the market value of the land as appraised by independent valuers. The purchase consideration represents a discount of RM10 million or 1.3% from the market value of the plantation assets of RM760 million. The land will be acquired by BPB’s wholly-owned subsidiary, Boustead Rimba Nilai Sdn Bhd.
The land comprises five plantation estates with a total planted area of approximately 10,000 ha. The estates have a robust age profile, with 64% of the oil palms in their prime maturity between 10 to 20 years, which is a peak production period. Meanwhile, 10% of the palms are young mature palms between 4 to 9 years, which bodes well for the Group’s prospects.
Tan Sri Lodin Wok Kamaruddin, Vice Chairman, BPB, said, “This marks a significant undertaking for the Group. This is indeed a viable opportunity as the estates are located in proximity to our existing estates in Sabah, which will enable us to benefit from greater economies of scale. Upon completion of this proposed acquisition, our total plantation land bank will increase by 14% from 81,800 ha to 93,400 ha. This represents an increase of 16% in total planted area from 63,800 ha to 73,900 ha.”
“Furthermore, given our proven track record of improving efficiencies and productivity on our existing estates, we will be able to undertake such measures on these new estates. To achieve this, we intend to invest approximately RM250 million over a 10-year period, including replanting of oil palms with higher yield planting materials, implementing good agricultural practices, construction of a new palm oil mill, and improving the infrastructure surrounding the estates, amongst other initiatives. This is expected to boost yield and profitability of the estates over the long run.”
“Once successfully completed, we are confident that this proposed acquisition will unlock substantial value for the Group. All in all, we are very much optimistic on our prospects for the coming years ahead,” concluded YBhg Tan Sri Dato’ Seri Lodin.
The proposed acquisition is expected to be completed by the second quarter of 2018, subject to completion of the conditions precedent. Affin Hwang Investment Bank Berhad is the principal adviser to BPB for the acquisition.
