Malaysian Plantation Mega-Merger. 'Nervous Nellie' PNB Gets Cold Feet. Why?

A 9.0 billion dollar merger of three Malaysian plantation companies to create the world's largest listed palm oil firm has hit a snag, with their majority shareholder getting cold feet, a report has said.

The New Straits Times, citing unnamed sources, said government investment vehicle Permodalan Nasional Berhad (PNB), the majority owner of all three state-linked companies, had surprised investors with a 'change of heart.' It is most puzzling that the same PNB directors who had agreed to the merger in December when it was proposed would now want to review some of the deal's details.

"Why now?" a source close to the deal was quoted as saying. "Why would anyone want to scuttle a deal so well received by the market and undermine it now?"

Synergy Drive, the vehicle set up for the deal, last month said a sale and purchase agreement would be signed in January to join Sime Darby, Golden Hope Plantations and Kumpulan Guthrie and a number of their units. The announcement followed the acceptance by the three companies of acquisition offers from Synergy Drive. The deal was expected to be inked on Monday but instead, Sime and Guthrie said in statements to Malaysia's bourse late Monday that Synergy Drive had extended their deadline to January 29.

Golden Hope said it was seeking "an extension of time to enter into the definitive agreement" from Synergy Drive.

The newspaper said PNB called for a review of the deal last week, after Synergy Drive announced its chief executive-designate, who is also Sime Darby's group chief executive, Ahmad Zubir Murshid.

"It also seems to be a test of wills between PNB which is delaying the deal and the market and (the government) which want the merger to happen," another source was quoted as saying.

Investment giant CIMB, via Synergy Drive, in November proposed the merger, valued at 31.4 billion ringgit (8.96 billion dollars). The move is aimed at boosting Malaysia's status as a top palm oil producer amid growing regional competition.

Shares in Kumpulan Guthrie and Golden Hope were down in morning trade Tuesday on the news. Kumpulan Guthrie was down 0.06 ringgit at 4.80 and Golden Hope shed 0.05 ringgit to 6.10. (Channel Newsasia)

****** A temporary victory for Mat Public or a minor setback for those who stand to rake in billions? Life is not fair to everyone is it?
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