KUALA LUMPUR: Kuala Lumpur Kepong Bhd's (KLK) share price was down 2.62 per cent or 60 sen in morning trade amid talks that the group was buying a major stake in Boustead Plantation Bhd (BPlant)
Yesterday, the New Straits Times reported that Boustead Holdings Bhd would sell at least a 33 per cent stake in BPlant to KLK in a deal valuing the company at over RM3 billion.
The potential sale is seen as a component of a strategic initiative involving Boustead, its parent company the Armed Forces Fund Board (LTAT), and KLK to privatise BPlant.
The potential sale of a significant chunk of Boustead's 57 per cent stake in BPlant to KLK will trigger a mandatory general offer.
As at 10.50am, KLK was down 22 sen or 0.98 per cent at RM22.28, valuing the group at RM24.06 billion.
Following the potential general offer, KLK is poised to become the predominant shareholder of BPlant, which possesses an extensive land portfolio of over 98,000 hectares.
Sources familiar with the deal have indicated that this move will enable Boustead to generate significant funds, which can be used to partially repay its RM1.4 billion debt that is due next year.
Furthermore, LTAT and Boustead will retain the option to gradually divest their interests in BPlant or participate in its value creation in collaboration with KLK, according to these sources.
BPlant's stock price has surged by 100 percent since early June when reports first emerged about Boustead's intention to divest its stake in the company.