By Ying Xian Wong


Boustead Plantations' shares surged Thursday after a key shareholder made an offer for the palm-oil producer following another company's withdrawal from a stake-acquisition deal.

The stock rose as much as 11% in morning trade after Malaysia's armed forces pension fund said it would buy out Boustead at MYR1.55 a share, the same pricing that rival palm-oil planter Kuala Lumpur Kepong had offered.

Boustead's shares resumed trading Thursday after being halted for two days pending news of the deal.

KLK had said late Wednesday that the deal was mutually called off as one of the conditions wasn't met by the cut-off date of Oct. 6.

KLK made its play to acquire a 33% stake in the plantation company from parent Boustead Holdings and Malaysia's Armed Forces Fund Board--known as LTAT--in August, offering $243.1 million.

Boustead Plantations, in a separate filing Thursday morning, said that LTAT "plans to proceed with the general offer" at MYR1.55 a share. The pension fund holds a nearly 11% stake in the planter, according to its 2022 annual report.

AmInvestment Bank said the collapse of KLK's offer will actually be good for the company, as the stake acquisition could have cut its net profit by 3%-5%, in part due to Boustead Plantations' high production costs.

If the deal had proceeded, it could have also increased KLK's net gearing increase to almost 60% from 45.7% currently, analyst Gan Huey Ling said in a note.

Hong Leong Investment Bank took a similar view, saying that the deal likely wouldn't have boosted KLK's earnings in the near-to-medium term due to Boustead Plantations' weak profitability and the resulting interest expenses.

About 45% of Boustead Plantations' planted areas are old and due for replanting soon, analyst Chye Wen Fei said in a note.

Boustead Plantations shares were last 6.3% higher at MYR1.35. KLK was last 0.3% higher at MYR21.54.


Write to Ying Xian Wong at yingxian.wong@wsj.com


(END) Dow Jones Newswires

10-05-23 0008ET