Ezyhealth to buy palm-oil unit of Wilmar
Ezyhealth to buy palm-oil unit of Wilmar
Angus Whitley, Bloomberg/Singapore
Ezyhealth Asia Pacific Ltd. agreed to buy the palm-oil refinery unit of Wilmar Holdings Pte for S$1.29 billion (US$770 million), exiting the health-care business to tap demand for edible oils.
Ezyhealth will fund the acquisition by selling 21.5 billion new shares to Wilmar for S$0.06 each under a so-called reverse takeover, Ezyhealth said in a statement on Friday.
The stock closed at S$0.04 on Thursday. Ezyhealth plans to sell its entire existing business to the current chief executive officer.
Singapore-based Ezyhealth, which has posted annual losses for at least six consecutive years, is switching industries to sell edible oils to China and Southeast Asia.
Malaysia and Indonesia produce 80 percent of the world's palm oil, which is processed into margarine and into chemicals used in soap.
"The proposed acquisition will provide Ezyhealth with a new tangible core operating business with a credible track record," Ezyhealth Chairman Yeo Wee Kiong said in the statement. "The palm oil industry is one of the fastest-growing segments of the global vegetable oil markets."
Ezyhealth stock jumped S$0.03, or 75 percent, to S$0.07, valuing the company at S$18 million. That's more than triple the S$5 million that CEO Sin Keng Choo will pay for the business.
Wilmar International Ltd., as the new Singapore-based company will be named, owns oil-palm plantations and palm fruit processing mills in Indonesia and sells its products in 30 countries.
China and India are the largest users of palm oil, which competes with soybean, canola oil and sunflower oils, and animal fats.
The company reported net income of $60.4 million from sales of $5 billion in 2004, Ezyhealth said in its statement.
Wilmar is the world's second-largest trader and processor of edible oils, according to the Web site of Adani Wilmar Ltd., a joint venture between Wilmar Holdings and India's Adani Group.
"It is a big player in the palm oil market," said Benny Tjoeng, vice president director of PT Astra Agro Lestari, Indonesia's largest publicly traded plantation company. Wilmar operates refineries in Medan and Palembang through its Bukit Kapurreksa unit, Tjoeng said.
Wilmar is the largest palm oil refiner, palm kernel crusher and specialty fats manufacturer in Indonesia, according to the Adani Wilmar Web site.
Palm oil for delivery in March 2006 rose 6 ringgit to 1,417 ringgit ($375) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur at 5 p.m. local time.
Exports of Malaysian crude and processed palm oil may rise to 14.6 million metric tons next year, raising export earnings 11 percent to 22.7 billion ringgit, the Ministry of Finance said Sept. 30.