Kuala Lumpur Kepong Follows The Smart Move

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Dec 18 2006
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As blogged earlier in FinanceTwitter, one after another palm oil plantation company starts to build its’ shield when the mega-merger of Kumpulan Guthrie Berhad (KLSE : GUTHRIE, stock-code 3131), Sime Darby Berhad (KLSE : SIME, stock-code 4197) and Golden Hope Plantations Berhad (KLSE : GHOPE, stock-code 1953) set the tone on the direction of plantation sector within Malaysia.

This round it’s Kuala Lumpur Kepong Bhd (KLSE : KLK, stock-code 2445) turn when it announced it is acquiring Swiss-based Dr W Kolb Holdings AG, a specialty oleochemical holdings company, for 135 million Swiss francs (RM393.39 million). KL Kepong said on Dec-18-2006 that the purchase price included a net working capital of 30.9 million Swiss francs – reported Reuters & The Edge.

The Kolb group manufactures products for making detergents, industrial and household cleaners, personal care products, pharmaceutical diagnostics, paper, textiles, inks and paints. KL Kepong said Kolb’s downstream specialty oleo-chemical business with its larger product range and in-house technologies would be synergistic to the former’s oleo-chemical manufacturing business.

The company said it would supply fatty alcohol and fatty acids to Kolb, adding that the acquisition would enable KL Kepong to develop immediate market penetration in Europe.

Isn’t it interesting that all the top big players in this sector seems to rush against time to expand or consolidate to make it bigger in terms of market value in order to make it difficult to be eaten alive? Who do you think will be the next to make similar announcement? First, it was IOI Corp, then Kuok Group and now KLK – I bet there’ll be more to come. The next 3 companies could be Batu Kawan Berhad – RM 3.2 billion market capitalization, Asiatic Development Berhad – RM 3.0 billion market capitalization, United Plantations Berhad – RM 1.8 billion market capitalization.

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