Kotagala Plantations acquires Union Commodities

Kotagala Plantations PLC (Kotagala), a leading Regional Plantation Company (RPC) in the country yesterday announced the acquisition of 100 percent stake in Union Commodities (Pvt) Ltd. (Unicom) for a consideration of Rs.1.575 billion.

A corporate disclosure filed by the company revealed the purchase of 6,000,000 shares ( at Rs.262.50 per share) of Unicom, the fourth largest tea exporter of Sri Lanka.

The forward integration with Unicom will enable Kotagala to have a presence in the tea exporting arena besides the existing competence in tea and rubber plantation. Despite the takeover, Unicom founder Chairman Chanaka De Silva will continue remain in the post while other directors will also continue to serve in their capacity. However Kotagala is yet to appoint nominees to the board to pursue synergies arising from the tea plantation business.

Unicom was established in 1985 and has a state-of-the-art factory with an in-house advanced tea bagging facility. In addition to tea, the company exports other commodities and food items such as sesame, cloves, pepper etc. Unicom is a diversified group which has fully-owned subsidiaries in shipping and freight forwarding located in Kelaniya.

Koggala, which is mainly in to manufacturing and sale of tea, posted a net profit of Rs. 212.5 million for the six months ending September 30, 2012 against the Rs. 95.15 mil- lion recorded in the corresponding period last year. For the financial year ending March 31, 2012 the company posted a net profit of Rs.438.6 million with earnings per share of Rs. 13.71. The company’s share is trading at Rs. 75.30 and has a market capitalization of Rs. 2.4 billion.

Kotagala comprises of 12 tea plantations and 11 rubber plantations with the bulk of the company’s tea being cultivated in the Western High Grown Dambulla district and in the Low Grown Kalutara district.