[SINGAPORE] First Resources will buy the remaining shares it does not own in Austindo Nusantara Jaya after its acquisition of a 91.2 per cent stake in the Indonesia-listed company, the palm oil producer said on Monday (Aug 25).
It will purchase around 6.2 per cent of the issued and paid-up share capital of Austindo Nusantara Jaya, an Indonesian Stock Exchange (IDX)-listed company primarily engaged in the palm oil plantation business.
On Mar 18, First Resources’ majority-owned subsidiary Ciliandra Perkasa entered a conditional agreement to acquire a 91.2 per cent stake or around 3.1 billion shares of Austindo Nusantara Jaya for US$329.8 million.
At a share purchase price of 1,813 rupiah per share, the acquisition was completed on May 6 by First Resources. The company assumed Ciliandra Perkasa’s rights to acquire the shares via a novation agreement inked between the two parties on Apr 11.
Upon the completion of the transaction, First Resources is obliged to make a mandatory tender offer to purchase the balance shareholdings in Austindo Nusantara Jaya.
This amounts to a maximum of 8.8 per cent of the group’s issued and paid-up share capital or around 296.2 million shares.
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From Aug 26 to Sep 24, First Resources will conduct the mandatory tender offer to purchase some 207.6 million of Austindo Nusantara Jaya shares, representing a stake of around 6.2 per cent.
This excludes around 88.5 million of Austindo Nusantara Jaya shares that were acquired by Ciliandra Perkasa through the open market at prevailing market prices for a total cash consideration of 157.94 billion rupiah (S$12 million) or around US$9.7 million.
The offer price for the mandatory tender offer is 1,813 rupiah per share, unchanged from the share purchase price of the earlier acquisition.
Beyond the palm oil plantation business, Austindo Nusantara Jaya is a holding company for several subsidiaries that operate in the production and sale of palm oil and other sustainable food crops, alongside renewable energy.
Vertical integration strategy
As part of First Resources’ broader vertical integration strategy, the acquisition is in line with its long-term goal of becoming an integrated plantation player with processing capabilities that value-add to its upstream produce.
Austindo Nusantara Jaya is expected to play a key role as one of the main suppliers for the palm oil producer’s downstream operations.
The company said in March that the proposed acquisition “presents a rare opportunity for the group to expand its upstream oil palm plantation footprint and enhance feedstock availability for its growing downstream operations”.
The transaction is set to boost its hectarage by around 25 per cent and reinforce its position as a regional palm oil producer, First Resources said then.
The additional production from the palm oil plantations and crude pail oil (CPO) mills acquired are expected to boost its CPO output by 25 per cent to 1.25 million tonnes, the company added.
This increase would enhance the certainty and reliability of feedstock supply for its 1.35 million tonnes of refining and processing capacity.
First Resources hopes to expand Austindo Nusantara Jaya’s palm oil plantation areas by exploring potential acquisitions.
It plans to rejuvenate unproductive plantations and to extend the productive cycle of the plantations.
The palm oil producer intends to improve Austindo Nusantara Jaya’s plantation infrastructure and logistics, such as by optimising internal distribution routes from plantations to processing mills and enhancing support facilities.
First Resources said it does not intend to delist the company from the IDX or to privatise it.
Shares of First Resource finished Friday unchanged at S$1.76.
