IOI plans $138m palm plantation acquisition

18 March 2008 04:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Malaysian palm oil firm IOI Corp said on Tuesday that it plans to acquire a 65% stake in two Sarawak-based plantation companies for Malaysian ringgits (M$)439.85m ($137.88m) to capitalise on the strong growth projected for the palm oil industry.

The proposed acquisitions of Double Dynasty and its subsidiaries/affiliates (DD Group), and Nirwana Muhibbah, are expected to be completed in the second quarter of this year, and will add to IOI’s plantation operations in Sarawak where it currently has 9,000 hectares, it added in a statement.

The two companies have a total plantation area of 44,350 hectares, of which approximately 13,500 hectares make up the planted area, IOI said.

“IOI group intends to progressively develop the remaining 30,850 hectares non-planted areas into oil palm plantations within the next few years,” it said adding that it would increase the plantation land by another 44,350 hectares after the acquisition to continue expanding its palm oil business.

IOI signed a conditional share sale agreement for its 65% stake with the companies on Monday. The remaining 35% stake will be held by Sarawak’s land custody and development authority (LCDA) and “local natives”, it said.  

“The acquisition will enable IOI to lead and manage the oil palm cultivation whilst enabling the state and the local natives to also share the benefits in the success of the business, thereby providing long-term benefits to the local community,” IOI said.

IOI is the world's largest publicly traded palm oil producer and the proposed acquisition will increase its plantation area in Malaysia to 213,800 hectares, while in Indonesia, its land holdings total 152,000 hectares through two joint ventures.

($1= M$3.19)

By: Arujnee J Ram
+65 6780 4359

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