KUCHING: KUB Malua Plantation Sdn Bhd (KUB Malua), a wholly-owned subsidiary of KUB Malaysia Bhd (KUB) has entered into a conditional Sale and Purchase Agreement with Kwantas Plantations Sdn Bhd (Kwantas), a wholly-owned subsidiary of Kwantas Corporation Bhd to acquire a brownfield oil palm plantation land in Sungai Kinabatangan, Sabah measuring approximately 1,534 hectares (3,791 acres) for a cash consideration of about RM100.44 million.
The total purchase consideration represents a discount of 13.4 per cent from a market value of RM116 million, and will be funded via internally generated funds and/or bank borrowings.
The country lease on the land has a tenure of 999 years, expiring on December 31, 2887.
The land, which has a total planted area of 1,503.05 hectares, produced 33,727 metric tonnes of fresh fruit bunches (FFB) in 2016.
Commenting on the proposed acquisition, KUB’s president/group managing director, Datuk Abdul Rahim Mohd Zin said the group has been eyeing for a good brownfield plantation asset to acquire for the past year.
“We believe that this particular parcel, with its prime palm age and robust yield profile exceeding 20 tonnes per hectare combined with its strategic location, will be a positive addition to our overall plantation land bank,” he added in a statement yesterday.
KUB currently has a total of four parcels of oil palm plantations; two in Johor and the other two in Sarawak, with a total aggregate land size area of 7,332 hectares.
Upon the completion of the proposed acquisition, the total plantation land bank will increase to 8,866 hectares.
“In line with the group’s strategy to focus our financial resources in further expanding our core businesses, we are pleased that the growth plans for our Agro sector are now starting to gain traction.
“We are optimistic that this acquisition will provide immediate contribution to our earnings going forward and also deliver synergetic benefits to the plantation business,” continued Abdul Rahim.
The proposed acquisition is subject to shareholders’ approval at an extraordinary general meeting and is expected to be completed by the fourth quarter of 2017.