IOI to sell 70% stake in Loders Croklaan for RM4b

The palm oil player expects to make a gain of RM2.5b in the stake sale and retains a 30% ownership interest


IOI Corp Bhd is selling of 70% of IOI Loders Croklaan Group BV to a US agricultural trader and processor, Bunge Ltd, for about RM3.99 billion (US$595 million [RM2.5 billion] plus €297 million [RM1.49 billion]).

The Bursa Malaysia-listed integrated edible oil group palm oil player noted it intends to use close to RM1.97 billion of the sale proceeds to repay borrowings, while another RM1.2 billion for working capital and future investments.

IOI also proposed to use RM788 million to pay dividends to shareholders (equal to 13 sen a share). A definitive sale and purchase agreement with Bunge is expected within the next 12 months, subject to regulatory and other customary approvals, including IOI’s shareholders approval.

IOI expects to make a gain of RM2.5 billion in the stake sale and retains a 30% ownership interest and customary protective rights.

As part of the transaction, for a period of five years after closing, Bunge will have the right to purchase the remaining interest in Loders from IOI, and IOI will have the right to sell its interest to Bunge.

According to IOI’s statement yesterday with the exchange, Loders will, in combination with Bunge, be part of a global agri-food company with differentiated and comprehensive product offerings based on both tropical and seed oils, and world-class formulation and application capabilities.

Loders will continue its focus of being a leading specialty edible-oils solution provider with premier formulation and application capabilities, backed by a traceable and sustainable supply chain in tropical oils — particularly palm oil.

“During the 14 years since IOI acquired Loders, it has grown from having three processing plants to seven plants in Europe, North America and Asia, and earnings have nearly quadrupled during this period.

“In order to sustain its significant growth and better serve its multinational customers, Loders will need to expand its processing plant footprints to regions such as South America and South Asia, and offer more varied product offerings including seed oil-based products,” IOI noted.

IOI added that the faster and more effective way to do so is by leveraging on Bunge’s existing plant assets in these regions and Bunge’s established integrated supply chain in seed oils

IOI CEO Datuk Lee Yeow Chor said: “After the transaction, IOI will still play an important role in Loders given our expertise in palm oil sourcing and our business experience in the fast-growing Asia-Pacific region.”

IOI will have two representatives on Loders’ five-member board of directors and our representatives will also be involved in key management decisions taken by Loders,” he said.

Lee added that IOI will continue to be a major supplier of palm oil and palm products to Loders after the transaction.

“IOI will maintain our strong sustainability commitments as spelled out in IOI Group’s Sustainable Palm Oil Policy,” he said.

Bunge CEO Soren Schroder said: “We have tremendous respect for the quality business that IOI has built with Loders and look forward to adding their global customer and application capabilities into Bunge’s already strong business.

“Our combined capabilities and differentiated product offerings will create the leading solutions provider in business-to-business oils, and enable us to meet growing customer needs globally,” he added.