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By Ying Xian Wong
Boustead Plantations shares jumped early Friday after Kuala Lumpur Kepong offered to buy a 33% stake in the former.
Shares in the Malaysian plantation company rose as much as 10% and were recently 8.8% higher at 1.49 ringgit, bringing year-to-date gains to 131%.
Trading in the stock was suspended Thursday before the announcement.
Kuala Lumpur Kepong on Thursday proposed to acquire a 33% stake in Boustead Plantations from parent Boustead Holdings for cash consideration of MYR1.15 billion ($247.6 million), or MYR1.55 a share.
Kuala Lumpur Kepong, Boustead Holdings and the Malaysia Armed Forces Fund Board will be the top three shareholders of Boustead Plantations following the transaction. They will extend a mandatory takeover offer to acquire all remaining Boustead Plantations shares not already owned by the three and delist the company.
The proposed “strategic collaboration agreement” among the three parties is aimed at enhancing Boustead Plantations’ operational efficiencies and crude palm oil plantation yields over the long term, KLK said in a filing.
Maybank Investment Bank raised Boustead Plantations’ rating to buy from hold and its target price to MYR1.55 from MYR0.92, citing the offer as “a good price for Boustead Plantations’ minority shareholders,” given upside of around 13%.
Maybank analyst Ong Chee Ting advised shareholders to accept the cash offer, noting that Boustead Plantations’ shares have only traded within a MYR0.235-MYR1.37 range since its initial public offering in 2014.
Write to Ying Xian Wong at [email protected]
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