MP Evans sought to bolster its defence against a hostile bid from Kuala Lumpur Kepong by selling a minority stake in an Indonesian palm oil business at a valuation higher than that its suitor is offering.
MP Evans revealed it had sold for $100m its 36.8% stake in Sumatra-based PT Agro Muko to joint venture partner Sipef which, thanks to a separate deal too, will see its stake in the business rise to 95%.
The deal, which comes nearly 30 years after PT Agro Muko started development of plantations now stretching to 19,500 hectares, extends a policy of disposing of minority shareholdings, MP Evans said.
"The board has sought ultimately to divest its minority-held Indonesian estates, which are not managed by the group, in favour of acquiring or developing its own, directly managed new projects," MP Evans said.
However, MP Evans said that the sale also underlined the valuation of £10.82 a share identified by an independent valuer, and which is well above the £7.40 a share which Kuala Lumpur Kepong - or KLK, the Malaysia-based plantations group - has offered for the group, and seen rejected.
"The total sale consideration amounts to … a figure of $13,000 per planted hectare," MP Evans said
"This compares with the $13,100 per planted hectare included in the independent valuation" of the group's assets, of which PT Agro Muko was seen as relatively lowly rated.
"The PT Agro Muko valuation was at the lower end of the independent valuer's range of values… in view of the project's older average age of planting and because approximately 9% of its planted area comprises rubber which is typically less profitable than oil palm," MP Evans said.
Peter Hadsley-Chaplin, the MP Evans chairman, said: "The agreed sale price strongly supports the independent valuer's recent valuation not only of PT Agro Muko but also of all the group's other Indonesian assets."
The deal "provides another compelling reason to reject the KLK offer", he said, adding that proceeds from the sale would be used to support a special dividend of 10 per share.
MP Evans said it was also "now actively reviewing a prospective investment" in another palm oil project, besides being at an "advanced stage" of talks to acquire "two projects" covering a combined 5,000 hectares of land near the group's existing operations in East Kalimantan, Indonesia.
By Mike Verdin