Kuala Terengganu, March 6 – TDM Bhd has entered into a Heads of Agreement (HOA) with Terengganu Incorporated Sdn Bhd (TI) to acquire a 42.64% stake in Ladang Rakyat Trengganu Sdn Bhd (Ladang Rakyat).
The proposed acquisition will increase TDM’s current shareholdings in Ladang Rakyat from 19.12% (held via its subsidiary) to 61.76%. Ladang Rakyat has a planted oil palm plantation area of 11,467 hectares (ha) in Terengganu with an average tree age profile of 9 years.
Currently, TDM’s planted oil palm area stands at 44,493 ha, consisting of 31,848 ha in Terengganu and 12,645 ha in Kalimantan, Indonesia. The acquisition will boost TDM’s total planted oil palm area in Terengganu alone from 31,848 ha to 43,315 ha.
This move will also bring down the average age profile of TDM’s oil palm trees in Terengganu by 1.5 years, from 15.4 years to 13.9 years and this is expected to improve production yields moving forward.
Group Managing Director of TDM, Datuk Mohamat Bin Muda said, “We are incredibly pleased with this opportunity as it is a step in the right direction in improving our operational efficiencies and presents significant synergistic opportunities for the Group. By having a larger plantation area in Terengganu, we would be able to achieve economies of scale in plantation management.”
“At TDM, we have been RSPO certified since 2014 and this has enabled us to enjoy a better premium from the sale of our crude palm oil. We are confident of implementing our best practices to achieve RSPO certification for Ladang Rakyat’s plantations as well. That way, the entire Group will benefit from higher selling prices and improved earnings,” he added.
For the financial year ended 31 December 2015, Ladang Rakyat reported revenue and profit after tax and minority interest (PATAMI) of RM194.3 million and RM4.1 million respectively. As Ladang Rakyat is profitable, the acquisition is expected to be earnings accretive and will contribute positively to the Group’s financial performance.
The acquisition is in line with TDM’s aspiration to expand its planted area to reach 100,000 ha. It aims to be a pure plantation player and one of the leading producers of certified sustainable palm oil (CSPO) within the next three to five years.