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News Admin
 
Date
 28/11/2006
News Provider
 Mahamad Rodzi Abdul Ghani
News Source
 Bernama
Headline
 Entire Merger Deal To Be Transparent, Says Nazir Razak

KUALA LUMPUR, Nov 27 (Bernama) -- The entire merger deal resulting in the world's largest listed palm oil company in the form of Synergy Drive Sdn Bhd will be consumated in a transparent manner, so says CIMB's chief executive officer Datuk Nazir Razak.

Conceding that there was intense speculation the past few days since newsreports of the deal hit the market, CIMB's involvement and who was behind the relatively unknown Synergy Drive with details at best sketchy, he said:

"We see a commercial opportunity for us here. We are only providing seed financing. We do not know how much financing is needed for the share purchase exercise and the risks to be taken.

However, the deal, right from the offer made to the companies to be acquired, to their delisting and listing of Synergy Drive "would be transparent," said Nazir.

Under the RM31 billion deal, Synergy Drive, a special purpose vehicle set up by financial advisors CIMB Group, will acquire Sime Darby Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd and their subsidiaries, all of which are owned by Permodalan Nasional Bhd, he told a press conference here Monday.

The exericse, which would be completed by the fourth quarter of next year, would also lead to the eventual delisting of some nine public-listed entities and the listing of Synergy Drive on Bursa Malaysia.

Besides Sime Darby, Kumpulan Guthrie and Golden Hope, other listed companies to be delisted are Sime Engineering Services, Sime UEP Properties, Mentakab Rubber Co (Malaya), Guthrie Ropel, Highlands & Lowlands and Negara Properties.

Meanwhile, all nine companies announced to Bursa Malaysia later Monday that they have received the offer letter from Synergy Drive to acquire all their assets and liabiliites.

Nazir also stressed that Synergy Drive is a special purpose vehicle CIMB set up with two trustees comprising Rossaya Mohd Nashir and Wan Razly Abdullah.

"Please don't misunderstand that in any way. It is purely an SPV set up for the exercise and the two (CIMB) people are just trustees and they have two shares in the beginning.

"... And when all this is set and done, the two shares would completely be negligable in terms of value but whatever ringgit profits made on those two shares will be given to charity, that's all it is," he said.

He also gave the assurance that with these entities already operating, there would be "minimal interruption to what they are doing now" and that it would be "business as usual."

As to who or which company would lead the merger, he said, "As in every company, the CEO would be decided by its management board which in turn would be determined by the major shareholder of the company at that point in time."

He said that upon completion of the deal, PNB would hold at least 45 percent equity, followed by the Employees Provident Fund (10 percent) and the balance by minority shareholders.

To achieve real and long-term synergies from the merged entity, Nazir said he was looking forward to the creation of a merger integration committee largely comprising representatives from the various companies to crystallise the merger.

In drawing out what was a highly remunerative deal during the packed press conference attended by about 50 business and corporate journalists, he said that "a one percent cut in costs will lead to a 10 percent increase in profits."

The new company would have total plantation land of 600,000 hectares with a production capacity of nine million metric tonnes of fresh fruit bunches and 2.5 million MT of palm oil or about 5-6 percent of global production.

The resulting plantation entity would also have a market capitalisation of RM31.4 billion, a potential total revenue of RM26 billion and a combined workforce of over 107,000.

Despite intense questioning he was bombarded with given the complexities of the deal, there were also some light moments which Nazir, now considered one of Malaysia's foremost bankers, dished out to the media.

When asked on the outlook for the plantation sector by a lady reporter, he replied: "(I am a) banker lah my dear, get them from a plantation analyst (that would be) better."

To a suggestion what he would do if the whole deal which has within days become the talk of the town among business and corporate circles falls through, in jest he said: "I will go back to banking."

If for any reason one of the subsidiaries don't agree, the deal will still go through, but it "won't go through if one of the big three -- Sime Darby, Kumpulan Guthrie or Golden Hope -- opts out," he said.

On what would happen to the non-plantation activities under the merged group, he said: "Whether in future the management sees value creation in separate listings of some of the other subsidiaries, it would remain very much therefore."

As to who made the initial proposal for the deal and the stage it has developed, Nazir drew an analogy of CIMB being a chef preparing food for customers.

"However good a chef you think you are, before you decide what to cook, you have to try and find out what your customer's palate is and even then, after you cook and serve it, at this point, the customer can reject what you serve."

"We are in that analogy... at that point of serving the dish," he said.

"One has to explore whether there would be appetite for this deal with the key parties and shareholders," he said, admitting that CIMB was exploiting opportunities to provide an enabling structure to create a large plantation group amid talk abuzz in the market for some time now to create such an entity.

-- BERNAMA

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