MY’s Kuala Lumpur Kepong eyes bigger stake in British chemicals firm

Malaysian plantation giant Kuala Lumpur Kepong Bhd is considering raising its stake in British chemicals company Synthomer Plc as it looks to further expand its specialty chemicals business globally, two sources told Reuters.

Kuala Lumpur Kepong is talking with at least one financial adviser to explore potentially boosting its 26.3% stake in Synthomer, said the sources with knowledge of the matter.

The stake purchase could comprise primary and secondary shares, the sources added, asking not to be identified because the information is private. It is not immediately clear whether it will acquire a controlling stake.

The Malaysian company is the largest shareholder of Synthomer, which has a market capitalization of $604.1 million, according to Refinitiv data. The second biggest shareholder is UBS Asset Management (UK) with a 5.01% stake, followed by M&G Investment Management with 4.99%, the data show.

Kuala Lumpur Kepong and Synthomer declined to comment.

Kuala Lumpur Kepong is one of the largest oil palm and rubber companies in Malaysia with a current market value of $4.78 billion, according to Refinitiv data.

It has about 300,000 hectares of planted area for both oil palm and rubber with the land bank spreading across Malaysia, Indonesia and Liberia, according to its website. It diversified into resource-based manufacturing in the 1990s.

A larger stake could further expand Kuala Lumpur Kepong‘s specialty chemicals business and raise the earnings contribution from Synthomer, the sources said.

The London-listed company contributed equity profit totaling 260.6 million ringgit ($54.93 million) to Kuala Lumpur Kepong in the fiscal year ended Sept. 30, 2021 , according to the Malaysian firm’s latest annual report.

Synthomer has been expanding aggressively with the aim of becoming a leading global supplier and maker of polymers. Last year, it acquired the adhesive resin business of U.S.-based Eastman Chemical Company for $1 billion.

Shares of Synthomer in London rose 4.8% following the Reuters report. The stock has dropped 70.1% year-to-date, Refinitiv data show.

Reuters

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