Kuala Lumpur Kepong’s (KLK) ambitious plan to become a major shareholder in rival company Boustead Plantations has come to an end. The deal, which could have potentially led to the privatization of Boustead, has been terminated, according to a bourse filing by KLK on Wednesday.
Failed Deal and Termination
KLK had initially offered $243.1 million for a 33% stake in Boustead. However, both companies have mutually agreed to terminate the deal. KLK didn’t provide specific details as to why the decision was made, but it cited the failure to meet one of the deal’s conditions before the cut-off date of October 6.
Stock Impact and Repayment
Following the news, shares in KLK resumed trading on Thursday morning and experienced a decline of 0.7% to MYR21.34. Meanwhile, Boustead’s shares remained unchanged at MYR1.27 after a 13% drop on Tuesday. The trading suspension for both companies lasted for two days during anticipation of the deal’s outcome.
In order to finalize the termination, Boustead Holdings will be required to repay a MYR229.15 million deposit to KLK, as stated in Wednesday’s filing.
Potential Privatization and Financial Impact
KLK’s offer aimed to acquire the stake in Boustead Plantations from its parent company, Boustead Holdings, and the Malaysia Armed Forces Fund Board. The cash consideration offered was MYR1.15 billion, or MYR1.55 per share. This figure exceeded the closing price of MYR1.37 per share on August 23, the day before the offer was made.
Had the deal gone through, KLK, Boustead Holdings, and the armed forces fund board could have proceeded with the privatization of Boustead Plantations. However, with the agreement now collapsed, KLK has assured that this outcome will not have a material impact on earnings or net assets for the fiscal year 2024.