LONDON, UK: M.P. Evans Group, a UK-based company that operates oil-palm plantations in Indonesia and Malaysia, has announced that it has agreed to buy two Indonesian companies that own and manage a total of 8,350 hectares of oil-palm plantations in East Kalimantan, Indonesia, for US$60 million.
The two companies, P.T. Agro Bumi Kaltim (ABK) and P.T. Nusantara Agro Sentosa (NAS), are currently owned by PT Palma Serasih Tbk, a listed Indonesian company with other interests in the oil-palm sector. The deal is subject to the completion of legal and regulatory formalities in Indonesia, which are expected to be finalised before the end of 2023.
The acquisition is part of M.P. Evans Group’s strategy of increasing its planted area near its existing operations. The Group said that the majority of the plantations at ABK and NAS are young, with almost 90% planted between 2017-2019, and that it expects yields to increase as the palms mature. The Group also said that it will improve the agronomic standards and sustainability practices on both estates, and that it will integrate them into its registration with the Roundtable on Sustainable Palm Oil (RSPO).
The purchase price of US$60 million is on a cash and debt-free basis, and will be funded from existing resources, plus a final adjustment for working capital on completion. The price equates to US$9,000 per Group-owned planted hectare.
The latest audited accounts for ABK and NAS show that they both made losses in 2022, as they are still developing their plantations. The Group expects that their results will improve as they become more productive and profitable.