Kuok Group Consolidates To Defend Palm Oil Business

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Dec 14 2006
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The Kuok Group, controlled by tycoon Tan Sri Robert Kuok, is undertaking a mammoth S$6.6 billion (RM15.18 billion) corporate exercise to merge several of its companies here and in Singapore, including Wilmar International Ltd (SIN : F34) and PPB Oil Palms Bhd (KLSE : PPB, stock-code : 6823).

As part of the deal, Wilmar has offered to acquire PPB Oil Palms, Kuok Oils & Grains Pte Ltd (KOG) and PGEO Group Sdn Bhd for about S$4.1 billion. Wilmar said the acquisition of the companies would be satisfied via the issue of 2.4 billion Wilmar shares based on their last transacted price of S$1.71 per share.

The proposed enlarged entity will emerge as Asia’s leading agribusiness group and enable Wilmar to be the world’s leading merchandiser and processor of palm oil. According to The Edge financial news, Wilmar via CIMB Investment Bank Bhd on Dec 14 made a conditional voluntary takeover offer (VGO) for PPB Oil Palms via the issue of 2.3 Wilmar shares for each PPB Oil Palms share, valuing the deal at S$1.8 billion based on PPB Oil Palms’ paid-up capital of 445.42 million shares, or RM9.046 per PPB Oil Palms share. PPB Oil Palms’ pre-suspension price was RM8.95.

It also made an offer to acquire a combined stake of 72% in KOG from Kuok group companies, Kuok (Singapore) Ltd, Harpole Resources Ltd and Greenacres Ltd, for S$1.3 billion via the issue of 785.92 million Wilmar shares. Wilmar also offered to acquire PPB Group Bhd subsidiary FFM Bhd’s entire 28% stake in KOG for S$522.6 million via the issue of 305.63 million Wilmar shares.

KOG is the Kuok Group’s flagship company involved in processing and international trading of oil and grain products. As part of the exercise, Wilmar made an offer to FFM to acquire its 65.8% stake in PGEO for S$491 million via the issue of 287.12 million Wilmar shares.
It’s funny all of a sudden all the palm oil plantation companies in Malaysia aggressively consolidating or expanding after 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). Learning from past lessons, it could be due to the realization among the Chinese-based plantation companies that they need to remain strong and as big as possible to prevent from being forced to consolidate with other smaller player but loose the control just like what happened to previous former Chinese-based banks such as Kwong-Yik Bank, Southern Bank and a handful others.

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“Wilmar via CIMB Investment Bank Bhd on Dec 14 made a conditional voluntary takeover offer…”

I have a feeling CIMB is trying to engineering some kind of corner CPO market by consolidating the big CPO supply in market?

trying to corner cpo market like how the government did to the “tin market” but backfired decades ago?

they would be stupid to do that – as long as there’re alternative to the product or producer, it’s not easy to monopolize it … but in malaysia, anything is possible …

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