Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Palm oil play <a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> has made an <a href="https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3165328" target="_blank" rel="noopener">Offer</a> for <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>'s 56.2% stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>.
The RM3.10/share Offer price, a 26% premium to last close, values IJMP at RM2.7bn, or US$0.65bn.
Should the transaction conclude - and there appears no reason why it won't - KLK will be obligated to make an unconditional mandatory general offer for all shares in IJMP not held.
The transaction is subject to shareholder approval at EGMs for both IJM Corp and KLK. The SPA is also conditional on the consent from the lenders of IJM Corp and IJMP. 
IJM Corp is required to confirm on or before 5pm on June 11, if it wishes to proceed. IJM Corp said its board is in principle agreeable to finalise the terms and conditions with KLK.
This looks done.
More below the fold.

Palm oil play Kuala Lumpur Kepong (KLK MK) has made an Offer for Ijm Corp Bhd (IJM MK)'s 56.2% stake in Ijm Plantations (IJMP MK).
The RM3.10/share Offer price, a 26% premium to last close, values IJMP at RM2.7bn, or US$0.65bn.
Should the transaction conclude - and there appears no reason why it won't - KLK will be obligated to make an unconditional mandatory general offer for all shares in IJMP not held.
The transaction is subject to shareholder approval at EGMs for both IJM Corp and KLK. The SPA is also conditional on the consent from the lenders of IJM Corp and IJMP. 
IJM Corp is required to confirm on or before 5pm on June 11, if it wishes to proceed. IJM Corp said its board is in principle agreeable to finalise the terms and conditions with KLK.
This looks done.
More below the fold.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> made an offer to acquire <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>/IJMC’s entire stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  <div class="content-highlight">A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  </div>

Kuala Lumpur Kepong (KLK MK) made an offer to acquire Ijm Corp Bhd (IJM MK)/IJMC’s entire stake in Ijm Plantations (IJMP MK)/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

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A. Stotz Investment Research

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Equity Bottom-Up

<ul><li>Share price is less volatile and low correlation with Western stock markets relative to its sector</li><li>A robust order book and tender pipeline of infrastructure megaprojects for 2016 as well as IJM current bids for new projects including a highway and high-speed rail, should support solid profit growth at the company</li><li>The rebounding plantation business should gain from higher palm oil production supported by more planted areas attaining maturity in 2017</li><li>IJM trades in line with ASEAN Capital Goods at 17CE* 1.3x PB and has shown a good improvement in asset turnover</li><li>Risk: Changes in government policy on infrastructure spending</li></ul>* Consensus Estimates

Share price is less volatile and low correlation with Western stock markets relative to its sectorA robust order book and tender pipeline of infrastructure megaprojects for 2016 as well as IJM current bids for new projects including a highway and high-speed rail, should support solid profit growth at the companyThe rebounding plantation business should gain from higher palm oil production supported by more planted areas attaining maturity in 2017IJM trades in line with ASEAN Capital Goods at 17CE* 1.3x PB and has shown a good improvement in asset turnoverRisk: Changes in government policy on infrastructure spending* Consensus Estimates

IJM: Megaprojects in Pipeline to Fill Builder's Pockets

Malaysia

IJM Plantations Berhad is an investment holding company. The Company, through its subsidiaries, cultivates oil palm and milling.

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Ijm Plantations (IJMP MK)

IJM Plantations' Potential MGO From KLK

This appears a done deal. Assuming a mid-August completion, I estimate this is trading at a gross/annualised spread of 1.9%/10.7%. That looks okay....

David Blennerhassett

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

KLK MK made an offer to acquire IJMC’s entire stake in IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. If the SPA...

Arun George

IJM: Megaprojects in Pipeline to Fill Builder's Pockets

Share price is less volatile and low correlation with Western stock markets relative to its sector A robust order book and tender pipeline of...

A. Stotz Investment Research

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