Boustead Plantations expands land bank in Sabah

The purchase consideration for the land is RM750 million, derived at on a "willing-buyer willing-seller" basis after taking into consideration the market value of the land.

The purchase consideration represents a discount of RM10 million or 1.3 percent from the market value of the plantation assets of RM760 million.

The land will be acquired by BPB's wholly-owned subsidiary, Boustead Rimba Nilai Sdn Bhd.

The land comprises five plantation estates with a total planted area of approximately 10,000 ha. The estates have a robust age profile, with 64 percent of the oil palms in their prime maturity between 10 to 20 years, which is a peak production period.

Meanwhile, 10 percent of the palms are young mature palms between four and nine years.

BPB vice chairman Tan Sri Lodin Wok Kamaruddin said the acquisition marked a significant undertaking for the group.

"This is indeed a viable opportunity as the estates are located in proximity to our existing estates in Sabah, which will enable us to benefit from greater economies of scale. Upon completion of this proposed acquisition, our total plantation land bank will increase by 14 percent from 81,800 ha to 93,400 ha. This represents an increase of 16 percent in total planted area from 63,800 ha to 73,900 ha.," he said in a statement today.

He said in undertaking the new estates, the company plans to invest RM250 million over a 10-year period, including replanting of oil palms with higher yield planting materials, implementing good agricultural practices, construction of a new palm oil mill and improving the infrastructure surrounding the estates, among other initiatives.

Lodin said this is expected to boost yield and profitability of the estates over the long run.

"Once successfully completed, we are confident that this proposed acquisition will unlock substantial value for the Group. All in all, we are very much optimistic on our prospects for the coming years ahead," he added.

The proposed acquisition is expected to be completed by the second quarter of 2018, subject to completion of the conditions precedent.