KUALA LUMPUR: United Plantations Bhd is acquiring seven pieces of agricultural land totalling 8999.13 acres in Perak from Pinehill Pacific Bhd for RM413.57 million in cash.
The acquisition will include the palm oil mill, workers; living quarters and a site office and will be completed by the first quarter of 2019.
United Plantations said the proposed acquisition was consistent with its growth plan to continue expanding its land bank, when good business opportunities arise.
“The proposed acquisitions are expected to increase the group’s Malaysian plantation land bank by almost 10 per cent from 40,821 hectares to 44,463 ha.
“This will increase the total land bank of UP Group (including the group’s land bank in Indonesia of 18,663 ha) to 63,126 ha, from the current 59,484 ha,” United Plantations said in a filing with Bursa Malaysia.
United Plantations had entered into three conditional sale and purchase agreements (SPA) with Pinehill Pacific group of companies, namely Pinehill Plantations (Malaysia) Sdn Bhd, Syarikat Kaum Melayu Hilir Perak Sdn Bhd and Tahir, Rozlan and Tasariff Sdn Bhd, for the acquisition.
“The proposed acquisitions will not have any effect on the net asset and gearing of the group, as the proposed acquisitions will be satisfied entirely in cash and does not involve any issuance of new ordinary shares and borrowings in the group,” it added.
United Plantations expects the proposed acquisitions to contribute positively to its future earnings and earnings per share (EPS) in the medium to long term.
Pinehill Pacific, which is listed on the main market of Bursa Malaysia, said the proposed disposal provides an opportunity to unlock and realise the value of its investments within its subsidiaries.
“Given the size, location, the remaining tenure and market value of the plantation assets, it is an opportunity to dispose the plantation assets to United Plantations Bhd,” Pinehill Pacific said in its Bursa filing.
Proceeds raised from the proposed disposal is expected to be utilised for repayment of borrowings, funding the group’s existing oil palm plantation business in Indonesia and its working capital.