Sime Darby Plantation Offers to Buy NBPOL Shares
Kuala Lumpur, 9 October 2014 – Sime Darby Plantation launched an offer today, to buy all of the shares in New Britain Palm Oil Ltd (NBPOL), a leading producer of sustainable palm oil, to expand its plantation business. The offer is conditional upon Sime Darby Plantation obtaining a minimum of 51% acceptance of the NBPOL shares.
Sime Darby Plantation made the offer after it received a letter from the Honourable Prime Minister of the Independent State of Papua New Guinea (PNG), acknowledging that Sime Darby will be making a general offer for NBPOL and reiterating that Sime Darby’s proposed acquisition would not be contrary to PNG’s national interest in relation to Rule 27A of the PNG Takeovers Code.
In addition, the independent directors of NBPOL have indicated that they intend to recommend that NBPOL shareholders accept the offer, as they plan to do so themselves in relation to all NBPOL shares held by them, in the absence of a superior proposal and subject to the independent expert concluding that the offer is fair and reasonable.
“This is a significant milestone for Sime Darby. We are acquiring a low risk, well-managed, ongoing business concern that will add value to the Group,” said President and Group Chief Executive Tan Sri Dato’ Seri Mohd Bakke Salleh. “It is not often that an opportunity such as this presents itself. The strategic fit between NBPOL and Sime Darby Plantation is the key factor that will ensure the success of this deal.”
The offer will be subject to a number of conditions including the following:
NBPOL’s entire production of palm oil is certified by the Roundtable on Sustainable Palm Oil (RSPO), while Sime Darby Plantation is already the world’s largest producer of certified sustainable palm oil (CSPO). NBPOL’s two refineries, in Liverpool, United Kingdom and in PNG will be a suitable complement for Sime Darby Plantation’s existing downstream operations in Europe and Southeast Asia. Following the acquisition, total refining capacity within the group will increase to 4.05 million tonnes.
- Sime Darby Plantation receives sufficient acceptances, and after the acceptances are processed, Sime Darby Plantation will hold NBPOL shares carrying not less than 51% of the voting rights in NBPOL;
- The European Commission issues a decision or is deemed to have done so, declaring the offer compatible with the internal market without attaching to its decision any conditions or obligations that are not reasonably satisfactory to Sime Darby Plantation; and
- No order is made or action is taken enjoining or restraining the offer including pursuant to Rule 27A of the Takeovers Code.
Sime Darby Plantation is offering GBP7.15 for every NBPOL share, a 55.7 per cent premium over the two-month volume weighted average price. Sime Darby Plantation intends to delist NBPOL's shares from the London Stock Exchange, subject to having acquired the necessary shareholding level with which to do so.
The offer values NBPOL at about RM84,000 on an Enterprise Value per hectare, which is comparable to recent industry acquisitions. This valuation includes the two refineries and the other non-palm oil businesses of the company.
“The price we have offered for NBPOL is fair and is reflective of the underlying value of the business,” Mohd Bakke said.
The offer price takes into account NBPOL’s efficiency, with its potential high Fresh Fruit Bunch (FFB) yields and high oil extraction rate.
The proposed acquisition also fits with Sime Darby Plantation’s strategy to expand its landbank. Post-acquisition, the combined landbank of the two companies will be nearly one million hectares.
The acquisition will be funded through internally generated funds and external borrowings. The increase in gearing will be managed through tight control of capital expenditure across the Group and proceeds from future corporate exercises.
NBPOL is a well-managed company with an experienced management team. The average age profile of its trees is 10.8 years, and its location, PNG, is regarded as having among the highest yields in the world, with some of the best soil conditions for oil palm planting. NBPOL is also an established downstream player and was the first company to produce 100% fully segregated, certified sustainable palm oil.
Sime Darby Plantation, the plantation and agribusiness arm of the Sime Darby Group accounts for about a quarter of global CSPO production and it is also the world’s largest producer of segregated certified sustainable palm oil.
“As a brownfield asset, NBPOL will immediately contribute to the Group’s earnings without the incumbent risks associated with greenfield expansion,” said Datuk Franki Anthony Dass, Managing Director of Sime Darby Plantation.
NBPOL has about 135,000ha of land in PNG of which 80,000ha is planted. NBPOL’s average FFB yield over the last five years was 23.5 tonnes per hectare. Barring adverse weather conditions, average yields can top 26 tonnes per hectare, which is higher than average yields in Sabah, the most productive palm oil producing state in Malaysia.
The company’s Liverpool refinery supplies all major UK buyers of segregated sustainable palm oil. This refinery will provide a complementary fit with Sime Darby Unimills, a wholly owned subsidiary of Sime Darby Plantation based in The Netherlands. This could potentially help Sime Darby to position Unimills as a fully segregated refinery, providing better expansion prospects in Europe for specialty products.
The Sime Darby Group has had a long presence in PNG and it is familiar with the operating environment of the country. This acquisition will continue that tradition and strengthen Sime Darby’s contribution to PNG’s economic growth.
For further information please contact:
Group Head, Communications & Corporate Affairs
Sime Darby Berhad
Tel: +(603) 2711 1676
Mobile: +(6019) 266 2003
About Sime Darby Plantation Sdn Bhd
Sime Darby Plantation Sdn Bhd is the plantation and agri-business arm of Sime Darby Group of Companies. It is one of the world’s largest plantation companies producing about 5% of global crude palm oil output.
Sime Darby Plantation Sdn Bhd is one of the co-founding members of the Roundtable on Sustainable Palm Oil and the world’s largest producer of certified sustainable palm oil and palm kernel.
Sime Darby Plantation Sdn Bhd is a wholly-owned subsidiary of Sime Darby Berhad.
About New Britain Palm Oil Limited
NBPOL is one of the world’s leading producers of sustainable palm oil certified in accordance with the Roundtable on Sustainable Palm Oil Principles and Criteria. Its operations are fully vertically integrated with operations in PNG and in the Solomon Islands. It is also the largest domestic sugar and beef producer in PNG and a global leader in high-quality oil palm seed production and research.
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