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(Sharecast News) - Indonesian palm oil producer MP Evans announced the completed acquisition of two Indonesian companies, PT Agro Bumi Kaltim (ABK) and PT Nusantara Agro Sentosa (NAS), on Monday.
The AIM-traded firm said both ABK and NAS possessed oil palm plantations in East Kalimantan, overseeing a combined planted area of 8,350 hectares.
Out of that total, 6,664 hectares were under the direct ownership of the group, while an additional 1,686 hectares were managed on behalf of associated smallholder co-operatives.
Most of the planted area consisted of young palms, with around 90% of them planted between 2017 and 2019.
MP Evans anticipated a rise in yields from the young areas as the palms matured.
The board said the acquisition was finalised for $59.4m, equivalent to $8,900 per hectare owned by the group.
Upon completion, an additional amount of around $4.3m had been allocated for working capital.
The group said it would disburse a total cash payment of $41.6m, comprising $36.1m for the entire share capital of the acquired companies and $5.5m to settle shareholder loans.
Furthermore, the group would take on bank loans denominated in Indonesian rupiah from the acquired companies, amounting to an additional $22.1m.
The group said its financial position post-acquisition remained strong, enabling it to explore further growth opportunities in the future.
"The completion of the ABK and NAS acquisition is an important step forward in the group's continuing growth and development," said chairman Peter Hadsley-Chaplin.
"Realising our strategic objective to increase the scale of operations close to our Kota Bangun project will enable the group to enhance operational efficiencies there.
"The group now has over 65,000 hectares under management, and we expect to continue to increase output and achieve future growth, supporting the group's ambition to deliver progressive returns."
At 1145 GMT, shares in MP Evans Group were up 1.75% at 767.2p.
Reporting by Josh White for Sharecast.com.
