Boustead Plantations to buy Sandakan land, mill

KUALA LUMPUR: Boustead Plantations Bhd said yesterday it plans to buy 5,531.25ha of plantation land and a mill in Sandakan from Sit Seng & Sons Realty Sdn Bhd.

The mill has a production capacity of 60 tonnes of fresh fruit bunches (FFB) per hour.

In a filing to Bursa Malaysia, Boustead Plantations said Sit Seng & Sons Realty had accepted its letter of intent and the indicative market value of the assets amounted to RM433 million.

While the deal is subject to a due diligence that could take up to 60 days, Boustead Plantations has paid RM7.56 million in refundable deposit to Sit Seng & Sons Realty.

“This acquisition of approximately 5,500ha of prime plantation land, together with a palm oil mill, in Sabah follows our acquisition of 11,600ha in Labuk and Sugut in Sabah. Our latest acquisition is part of the group’s overall strategy to expand our landbank.

“Once again, we will be able to benefit from greater economies of scale as a result of the proximity of these estates to our existing estates in Sabah. Not only will we be able to lower our operations cost but we will also enjoy opportunity cost savings on the construction of a new palm oil mill.

“The group will also see increased revenue and profit from the selling of crude palm oil instead of FFB,” said vice-chairman Tan Sri Lodin Wok Kamaruddin in a statement.

“The group is confident of the enormous economic potential and synergistic benefits should this proposed acquisition be completed successfully. This will also spell stronger growth prospects in the years to come,” said Lodin.

When the deal with Sit Seng & Sons Realty materialises, it will boost Boustead Plantations’ existing plantation landbank to 98,948ha.

Boustead Plantations shareholders had recently approved the purchase of 11,579ha of oil palm estates from Dutaland Bhd for RM750 million.