IOI Corp's bid triggers mandatory general offer acquisition of Unico-Desa

by **Cals** Thu 03 Oct 2013, 09:04

Published: Thursday October 3, 2013 MYT 12:00:00 AM
Updated: Thursday October 3, 2013 MYT 7:53:27 AM
IOI Corp's bid triggers mandatory general offer acquisition of Unico-Desa
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KUALA LUMPUR: Plantation giant IOI Corp Bhd has launched an RM1bil takeover of Unico-Desa Plantations Bhd at RM1.17 a share, just slightly below the latter’s last traded price.
The hardly-traded Unico-Desa had seen its shares being actively traded and hitting a high of RM1.30 last week, after speculation on a possible sale of a major block of its shares emerged.
IOI Corp said it had acquired close to 40% in Unico-Desa from companies and parties linked to Unico-Desa’s major shareholder, Teoh Hock Chai, for RM396.63mil, which works out to a price of RM1.17 per Unico-Desa share.
IOI Corp has, thus, triggered a mandatory general offer (MGO) for the rest of the 518.11 million shares, or 60.45%, in Unico-Desa at the same RM1.17 per share price, which works out to RM606.18mil.
Unico-Desa’s share price had run up last week to a high of RM1.30 a piece, its highest in 10 months. The shares closed at RM1.18 yesterday, with 4.26 million shares being traded.
IOI Corp, which had RM878.9mil in cash and balances as at June 30, said it was funding the takeover via internal funds and borrowings.
“The acquisition is in line with IOI Corp group’s plans to expand its oil palm business, whereby IOI Corp group’s plantation landbank would increase by 13,660ha, or 7.5%, from its present 183,207ha to 196,867ha,” IOI Corp said.
It added that the acquisition would allow the group to gain immediate access and controlling ownership over Unico-Desa’s established plantation operations in Sabah.
This is expected to bring synergistic benefits to the IOI Corp group, as it has an existing 98,088ha of oil palm planted area in Sabah.
“The acquisition and MGO is expected to enhance the IOI Corp group’s core plantation operations and contribute positively to the future earnings of IOI Corp,” it said.
Unico-Desa’s core asset is its 13,660ha landbank near Lahad Datu and Kinabatangan, Sabah. Of this, 12,700ha have been planted, and of that, 9,121ha are matured.
The takeover now will have to get the support of Unico-Desa’s minority shareholders, who will have to decide whether the offer price was attractive enough.
One plantation analyst said he viewed the acqusition as “fairly neutral” on IOI Corp’s earnings and held the view that the price being paid “was in line with market values, give or take 5%”.
The analyst also said that the price being paid by IOI Corp was higher than whatFelda Global Ventures Holdings Bhd (FGVH) had paid for the 100% stake in Pontian United Plantations Bhd. FGVH had launched an RM1.2bil buyout of Pontian at RM140 per share.
But he added that the higher price was justified, considering the scarcity of land, sizeable nature of Unico-Desa’s landbank as well as the synergies that IOI Corp could derive from the acquisition.
He also said that Unico-Desa’s yields were “fairly decent”.
Like many other plantation companies, Unico-Desa’s earnings have been hit by weak crude palm oil prices. It posted a mere RM348,000 in net profit for the financial quarter ended June 30 from RM10.89mil in the previous corresponding period, while revenue dropped to RM33.8mil from RM52.2mil.