Kuala Lumpur Kepong Offers to Buy 33% Stake in Boustead Plantations

Shares of Boustead Plantations experienced a surge on Friday following an offer from Kuala Lumpur Kepong to purchase a 33% stake in the company. The Malaysian plantation company saw its shares rise by as much as 10%, ultimately settling at a 8.8% increase at 1.49 ringgit. Year-to-date gains now stand at an impressive 131%.

Trading of Boustead Plantations' stock was temporarily halted on Thursday in anticipation of the announcement.

Under the proposed deal, Kuala Lumpur Kepong seeks to acquire the 33% stake from the parent company, Boustead Holdings, for MYR1.15 billion ($247.6 million), equivalent to MYR1.55 per share.

Upon completion of the transaction, Kuala Lumpur Kepong, Boustead Holdings, and the Malaysia Armed Forces Fund Board will become the three largest shareholders of Boustead Plantations. Furthermore, they plan to launch a mandatory takeover bid to acquire any remaining shares not already owned by the three parties and subsequently delist the company.

The strategic collaboration agreement between the three entities aims to enhance Boustead Plantations' operational efficiencies and increase crude palm oil plantation yields in the long run, as stated in a filing by KLK.

Maybank Investment Bank has since upgraded its rating on Boustead Plantations to "buy" from "hold." It has also raised the target price from MYR0.92 to MYR1.55, describing the offer as "a good price for Boustead Plantations' minority shareholders" with an upside potential of approximately 13%. Shareholders are advised to accept the cash offer, advised Maybank analyst Ong Chee Ting, highlighting that Boustead Plantations' shares have remained within a range of MYR0.235 to MYR1.37 since its initial public offering in 2014.