BPlant rebounds over 10% after LTAT proposes takeover after KLK deal falls through

KUALA LUMPUR (Oct 5): A day after the Armed Forces Fund Board (LTAT) announced its intention to privatise its 68.01%-controlled Boustead Plantations Bhd (BPlant), BPlant’s share price rebounded by 13 sen or 10.24% to close at RM1.40 on Thursday, though still 10.7% off the armed forces fund board’s RM1.55 buyout offer.

Prior to this, BPlant’s counter had sunk by as much as 24 sen to RM1.22 at the start of the week, amid speculation that the proposed equity disposal of 33% plus one share by LTAT and Boustead Holdings Bhd to Kuala Lumpur Kepong Bhd (KLK) had fallen through, before being placed on trading suspension for two days.

On Wednesday (Oct 4), right after KLK confirmed that the 33% stake buy had been called off, LTAT stepped in with its offer to take BPlant private.

The move pulled some investors back towards the plantation group’s stock on Thursday, which now gives the group a market capitalisation of RM3.14 billion, and pushed it up Bursa Malaysia’s top gainers and most actives lists for the day.

Shares in KLK, meanwhile, ended six sen or 0.28% lower at RM21.42, giving the group a market capitalisation of RM23.16 billion.

Under the initial deal, KLK ― after acquiring the 33% plus one share in BPlant ― had planned to extend a mandatory general offer at RM1.55 per share to privatise the plantation group, with KLK controlling a 65% stake, and LTAT the other 35%. KLK had planned to fork out RM1.15 billion for the stake buy, and another RM1.11 billion under the mandatory offer to buy up the remaining 31.99% in BPlant.

Now, LTAT is making a general offer on its own at the same price point by paying RM1.11 billion for the 31.99% stake in BPlant, despite currently facing liquidity issues. Boustead, the group that LTAT privatised just earlier this year, needs RM800 million by year end to meet its debt obligations, Defence Minister Datuk Seri Mohamad Hassan previously said.

At the time of writing, it still remains unclear what caused the KLK deal to be called off, or what drove LTAT’s decision to extend its own general offer after the former happened.

Regardless, Kenanga Research views LTAT’s buyout offer positively, given that the maintained offer price of RM1.55 per share is still a premium in the plantation sector ― and valued BPlant at 82 times its price-to-earnings ratio for the financial year ending Dec 31, 2024 (FY2024), and 1.3 times its price-to-book value ratio.

The research house maintained its recommendation for shareholders to “accept the offer” at RM1.55 a share, as it would allow them to exit at a better valuation than the equity market would have been ready to offer.

LTAT holds a direct 10.59% stake in BPlant, while it controls another 57.42% via Boustead. Besides LTAT and Boustead, BPlant has no other substantial shareholders.

It is worth noting that while KLK’s bid was in progress, the group had accrued a 3.09% stake or 69.29 million shares in BPlant, valued at RM107.4 million, under the RM1.55 per share offer price.

According to Bloomberg, the group’s other largest shareholders included Chong Yiew On with a 0.89% stake, Dimensional Fund Advisor LP with 0.59%, Lei Shing Hong Sec Ltd with 0.52%, and Teachers’ Retirement System of the City of New York with 0.4%.

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BPlant rises to RM1.41 after LTAT stepped in for RM1.55 per share buyout