KLK ups of­fer for MP Evans takeover bid

> Malaysian plan­ta­tion group re­it­er­ates its be­lief that there is strate­gic merit in syn­er­gis­ing op­er­a­tions of both com­pa­nies

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Kuala Lumpur Ke­pong Bhd (KLK) has in­creased its ini­tial of­fer for MP Evans Group PLC to 740 pence per MP Evans share, valu­ing it at about £415.4 mil­lion (RM2.25 bil­lion), af­ter share­hold­ers of MP Evans spurned its pre­vi­ous of­fer.

In a fil­ing with Bursa Malaysia yes­ter­day, KLK said the in­creased of­fer is based on the strate­gic merit it still sees in syn­er­gis­ing the op­er­a­tions of MP Evans with KLK’s from a ge­o­graph­i­cal and ca­pa­bil­i­ties per­spec­tive.

“The man­age­ment of MP Evans will also have op­por­tu­ni­ties to de­velop their ca­reers within the larger or­gan­i­sa­tion. To­gether, KLK and MP Evans should es­tab­lish best prac­tices for the fur­ther growth of both com­pa­nies and en­able the en­larged group to cap­i­talise on economies of scale in the oil palm sec­tor,” it said.

KLK said the in­creased of­fer rep­re­sents a sub­stan­tial pre­mium of 74% to the clos­ing price of 426.25 pence per MP Evans share on Oct 24, 2016 and 77% to the vol­ume-weighted av­er­age clos­ing price of 417.4 pence per MP Evans share for the 30 days ended on Oct 24, 2016.

It also rep­re­sents a pre­mium of 16% to the ini­tial of­fer price of 640 pence per MP Evans share, which was an­nounced on Oct 25, 2016 and sub­se­quently re­jected by share­hold­ers of MP Evans.

KLK in­tends to fi­nance the cash con­sid­er­a­tion through an amended ac­qui­si­tion loan fa­cil­ity pro­vided by The Hongkong and Shanghai Bank­ing Corp Limited and in­ter­nal cash re­sources.

The in­creased of­fer will not have any ef­fect on KLK’s share cap­i­tal and share­hold­ings of KLK’s sub­stan­tial share­hold­ers.

If the in­creased of­fer is ac­cepted, the KLK Group will see its gear­ing in­crease from RM4.6 bil­lion to RM6.9 bil­lion while gear­ing ra­tio will in­crease from 0.43 to 0.65 and net gear­ing ra­tio in­crease from 0.23 to 0.45.

Last month, KLK via its wholly owned sub­sidiary KL-Ke­pong In­ter­na­tional Ltd (KLKI) made a cash of­fer of 640 pence per MP Evans share to ac­quire the en­tire is­sued and to be is­sued share cap­i­tal of MP Evans. How­ever, the pro­posed takeover of the UK-based plan­ta­tion com­pany hit a snag when the board of MP Evans said that 54.72% of its share­hold­ers un­equiv­o­cally sup­port its stand to re­ject the deal. The share­hold­ers had, within 24 hours of the of­fer’s an­nounce­ment, con­firmed their in­ten­tion to re­ject the of­fer. MP Evans said its board, hav­ing con­sid­ered the of­fer to­gether with its fi­nan­cial ad­viser Roth­schild, is un­hesi­tant in unan­i­mously con­clud­ing that the of­fer by KLK is wholly in­ad­e­quate and sub­stan­tially un­der­val­ues the com­pany, its unique po­si­tion and its fu­ture growth po­ten­tial.

Its chair­man Peter Had­s­ley-Chap­lin also said that the of­fer re­flects nei­ther the ex­ist­ing value of the group’s plan­ta­tions nor the fu­ture value from its clearly de­fined strat­egy sub­stan­tially to in­crease its planted hec­tarage.

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