Boustead Plantations Rises Again After Takeover Report

By Ying Xian Wong

Boustead Plantations shares rose early Monday after local media reported that at least four bidders are lining up to acquire a majority stake in the Malaysian agricultural company.

Shares rose as much as 10% and were recently trading at 0.96 ringgit ($0.21), up 7.9%. Year-to-date gains stand at 49%, including a 43% gain this month alone.

The Edge Weekly reported in a publication dated Monday that Boustead Holdings is looking to dispose of its 57% stake in Boustead Plantations, with YTL Corp. Bhd., IOI Corp. Bhd., Wilmar International and Kuala Lumpur Kepong among bidders for the stake.

A spokeswoman for both Boustead Holdings and Boustead Plantations told The Wall Street Journal that she didn't have any details about plans for a stake disposal.

KLK was 5.1% higher in early trading, while the other three reported bidders were 0.5% to 1.5% lower.

Maybank Investment Bank analyst Ong Chee Ting on Monday kept a hold rating on Boustead Plantations, saying that any buyers will likely push for a discount on shares. "Potential buyer(s) is likely to require a hefty discount to factor in huge capex requirements to turn around Boustead Plantations' aging trees, as 46% of its oil palm trees are past prime (i.e. >20 yrs old)," he wrote in a research note.

The analyst advised shareholders "to hold out for a potential general offer," saying the upside is likely capped at the company's net tangible asset value of MYR1.30/share. He cautioned, however, that "failure to seal a deal may cause [the company's] share price to give back recent gains."

Maybank raised its target price on Boustead Plantations to MYR0.92 from MYR0.72.

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

(END) Dow Jones Newswires

June 18, 2023 23:16 ET (03:16 GMT)

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