KUALA LUMPUR: Sime Darby Bhd and I&P Group Sdn Bhd has entered into deals worth RM535.5 million for the exchange of land parcels in Selangor and Johor as well as oil palm assets.
The deals will allow Sime Darby to expand its plantation area in Malaysia for the first time since 2007, while I&P will secure a big piece of land in Semenyih, Selangor.
Sime Darby Property, the property unit of Sime Darby, in turn will unlock the value of its Semenyih land to fund strategic property development projects.
“This is a deal that makes sense for both parties. We were able to match our needs with our growth plans. The plantation division will be buying brownfield assets that will immediately contribute to our earnings.
“Our property division will be able to focus on strategic developments, such as the Malaysia Vision Valley and City of Elmina,” said Sime Darby president and group chief executive Tan Sri Bakke Salleh in a statement yesterday.
Sime Darby’s plantation unit, Sime Darby Plantation, has proposed to acquire two oil palm estates measuring 769ha and a mill in Yong Peng, Johor, from I&P Group for RM106.7 million.
The plantation entity is buying the oil palm estates and mill from Yong Peng Realty Sdn Bhd (YPR) and Perusahaan Minyak Sawit Bintang Sdn Bhd (PMSB).
YPR owns Lian Seng Estate in Batu Pahat and Talisman Estate in Kluang, Johor.
About 98 per cent of both estates, which are near Sime Darby Plantation estates in central Johor, are planted with oil palm.
PMSB owns a mill that is capable of processing 360,000 tonnes of fresh fruit bunches a year.
In addition, Talisman Estate has property development potential as it is located just 12km away from Kluang.
“This is a rare opportunity for us to acquire quality brownfield estates in Peninsular Malaysia. Not only will we get immediate earnings, but we will be able to deliver more value generating synergies and cost savings by sharing estate and mill management,” said Sime Darby Plantation managing director Datuk Franki Anthony Dass.
Separately, the Glengowrie Rubber Co (GRC) Sdn Bhd, a unit of Sime Darby Property Bhd, has proposed to dispose of two parcels of land in Semenyih measuring 327.55ha to Petaling Garden Sdn Bhd, a subsidiary of I&P Group, for RM428.8 million.
The GRC land is located in the Hulu Langat district, which is not a key development area for Sime Darby Property.
As the disposal is a related party deal due to Sime Darby and I&P sharing common major shareholders, it will require the approval of GRC’s minority shareholders.
“This is an opportunity to unlock the value of our assets at a reasonable consideration during a softening property market.
“This will free up resources for projects such as the City of Elmina, a new township that is being developed with wellness and liveability in mind,” said Sime Darby Property managing director Datuk Jauhari Hamidi.
The land disposal and asset acquisition between Sime Darby and I&P Group are not conditional upon one another.