Weak ringgit makes Sime Darby's buy more pricey

But the conglomerate is upbeat that its acquisition of NBPOL would pay off in the longer term, as it would enable its expansion and a chance to move up the value chain upstream

Published Mon, Feb 23, 2015 · 09:50 PM

Sime Darby

Kuala Lumpur

A LIMP ringgit is expected to make Sime Darby's acquisition of New Britain Palm Oil Ltd (NBPOL) more costly, given that the Malaysian currency has depreciated by some 7 per cent against the British pound since last October, when the Malaysian conglomerate made its takeover offer.

Sime's cash takeover offer for the London Stock Exchange-listed Papua New Guinea (PNG) oil palm planter closed on Monday.

AffinHwang Capital expects Sime to end up with 60 to 70 per cent of the company, as it is expected to accommodate the PNG government's desire to increase its stake in NBPOL from the current 18 per cent to 30 per cent. In a client note, AffinHwang said it was positive on the purchase, even though it could boost Sime's gearing to almost 0.5x; it said Sime had the ability to deal with higher borrowings, having raised RM1.3 billion (S$485.6 million)…

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes