Major shareholders in MP Evans have backed the board of the palm oil plantation owner, after it rejected a takeover bid from Kuala Lumpur Kepong.
Since KLK's offer on Tuesday, shareholders comprising over 40% of the company ownership, including the two largest, supported the board's decision to reject the offer, which it said "significantly undervalued the company".
"The board is pleased to announce that it has received the immediate and unequivocal support of shareholders," the company announced.
Kuala Lumpur Kepong, one of the world's biggest plantation groups with a value of $6bn, sweetened its takeover bid for London-based MP Evans to $517m (£415m), offering 740p per share on Tuesday, after initially offering 640p last month.
But even after the upgrade, the board said the offer did not account for the value of ME Evans' plantations.
The revised offer, "still did not reflect the substantial combined value of the majority-owned estates, plantation associates, smallholder co-operative schemes and Malaysian property assets of the MP Evans group," it said.
MP Evans' board said that KLK failed to recognise the true value of the company and its unique position with the company.
"The board's view in this regard is corroborated by the early and unequivocal support of a large proportion of our shareholder base," said MP Evans chairman Peter Hadsley-Chaplin.
Broker Fincap agreed with MP Evans, stating "the price was way too low and management were right to reject it."
"With sterling strengthening a little in the last week or so, 740p per share equates to an average of $13,750 per hectare for MP Evans subsidiary and associate plantations, still well below $18,000 to 19,000 per hectare of quoted peers," Fintech said.
"In our view, at current foreign exchange, a sensible value range for MP Evans would be 800p to 950p," it said.
Another broker, VSA said on Tuesday that offer of 780p to 850p was more in line with the current value of the business and future prospects.
Demand for palm oil
The global demand for vegetable oils continues to rise and palm oil has grown as a proportion of that demand, MP Evans said.
"[This indicates] strong long-term prospects for the group's output," the company said.
Stressing the young age profile of its plantings, the company said both the crops and the corresponding cash flows were expected to increase substantially in coming years.
"The group has a very strong balance sheet which provides a platform for further growth through both the acquisition of additional planted areas and the development of unplanted land," MP Evans said.
"The board is committed to a strategic plan for a significant increase in planted hectarage of oil palms as well as the construction of further palm oil mills," it said.
During the afternoon trade in London, MP Evans shares were still trading high, up 2.8% to 690p. The shares had reached a high of 710p on Tuesday.
By Tanya Ashreena