BPB buying palm oil land, mill for RM397m

KUALA LUMPUR: Boustead Plantations Bhd (BPB) is acquiring 4,915.25ha oil palm plantation land in Sandakan, together with a palm oil mill, for RM397 million cash.

The company said it would fund the acquisition through internally-generated funds and borrowings.

It said the acquisition was to replace some of BPB group’s plantation land in Peninsular Malaysia which were disposed in recent years with sizable plantation lands in Sabah at a lower cost.

“This is in view of the rapid developments in Peninsular Malaysia, which have resulted in land being less viable for plantation activities. This strategy also presents BPB Group with the opportunity to improve its income over the long term,” it said.

BPB said the acquisition was part of the group’s strategy to acquire more plantation lands in Malaysia in view of the scarcity of suitable and sizeable land banks for oil palm cultivation.

Upon completion, the total plantation land bank held by BPB Group will increase by about five per cent to 98,332ha, from 93,417ha.

This also represents an increase of six per cent in total planted area to 79,427ha, from 74,985ha.

It said the plantation lands were centrally located within BPB Group’s existing estates as well as the recently-acquired Pertama Estates.

BPB said the acquisition of the palm oil mill enabled the group to benefit in terms of processing the fresh fruit bunches produced from the plantation lands as well as existing estates surrounding the mill.

The acquisition would reduce BPB Group’s estimated capital expenditure for the Pertama Estates as announced on October 30 last year, considering that the mill would now replace the group’s initial plan to construct a new one on one of the Pertama Estates.

“The acquisition will enable BPB to strategically position itself to stay competitive in highlychallenging market conditions. It believes the strategic value creation will translate into operational efficiencies, thus improving profitability in the long run,” it said.

Acquisition of the palm oil mill enables group to benefit in terms of processing fresh fruit bunches produced from the plantation lands.’