UK palm oil firm fighting off Malaysian rival's advances

12.12.2016

A hostile takeover is always a tough nut to crack, as the battle over the palm oil plantation owner MP Evans is demonstrating.

The 150-year-old Tunbridge Wells company, which owns plantations in Southeast Asia and is listed on Aim, is battling the unfriendly advances of Kuala Lumpur Kepong (KLK), a Malaysian rival roughly ten times its size.

Yet despite approaching MP Evans shareholders with an improved offer of £416m, or 740p per share and some 76pc more than the company’s market valuation before its first bid, KLK has enjoyed limited success.

When a deadline passed on Friday, only 12.9pc of shareholders had accepted its offer.

“It has been quite touching to see the degree of support we have from shareholders,” said MP Evans’ chairman, Peter Hadsley-Chaplin, whose family owns 10pc of the company.

The battle is not over yet, however. KLK has extended the deadline for acceptances into January, even though investors such as Aberdeen Asset Management have spurned its advances.

As part of its defence, advised by Rothschild, MP Evans carried out an independent valuation of its business, which suggested it was worth around £10.82 per share, despite its market value.

That assessment was boosted last week when it sold its minority stake in another plantation owner, Agro Muko, for $100m (£80m), very close to the value it the asset was estimated at by the independent consultants.

MP Evans said it will return the cash to shareholders in a special dividend.

The company formerly owned coffee and rubber plantations, but in recent years has focused on palm oil as demand for the commodity has risen with booming populations.

It has also shifted focus from Malaysia to Indonesia and invested in new planting to increase yields.

Raymond Greaves, an analyst at Finncap, said KLK’s bid for MP Evans undervalued its plantations compared with peers listed in Southeast Asia and backed shareholders who rejected it.

Mr Hadsley-Chaplin said it remained possible that another big palm oil producer will come in with a rival bid, but the company had strong growth plans of its own.



telegraph

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