Genting Plantations Acquires Two Companies for US$42.15M

Genting Plantation Bhd announced it has agreed to acquire Cahaya Agro Abadi Pte Ltd (CAA) and Palm Capital Investment Pte Ltd (PCI) from Green Palm Capital Corp. for a combined US$42.15 million, according to The Edge Markets.

The two-part deal will add 21,995 hectares of land to the company’s land bank in Malaysia, raising its total oil palm acreage from 238,376 hectares to 260,371 hectares.

Under the terms of the first deal, Genting Plantations agreed to acquire 100% equity interest in Cahaya Agro Abadi Pte Ltd (CAA) for US$34.5 million. CAA’s 95%-owned subsidiary PT Agro Abadi Cemerlang has the rights to develop 8,095 hectares of plantations.

Under the terms of the second deal, Genting Plantations agreed to acquire 100% equity interest in Palm Capital Investment Ltd (PCI) for US$7.6 million. PCI’s 95%-owned subsidiary PT Palma Agro Lestari Jaya holds rights to develop 13,900 hectares into an oil palm plantations.

“The proposed acquisitions are in line with Genting Plantations’ long-term strategy to increase its interest in the palm oil business, consistent with its confidence in the continued growth prospects of the industry,” the company said in a filing with the stock exchange reports the Sun Daily. “The proposed acquisitions represents another positive step by the group towards realising [sic] its vision of establishing itself as a major player in the industry.”

The two parcels of land are in close proximity to Genting Plantations’ land in West Kalimantan, and the deal is expected to provide the company with additional economies of scale and synergies. And as 3,127 hectares of the purchased land is already planted, the company states that the deal will drive upstream expansion, increasing the group’s total planted area by 4.6% from 67,702 hectares to 70,829 hectares.

Genting explains that the two part deal, which is expected to close in the third quarter of this year, “represent(s) a strategic investment by Genting Plantations, which is expected to contribute positively to the earnings as well as shareholders’ value of the company in the future.”