Ratings agency Moody's Investors Services had declared IOI Corp Bhd's announced acquisition of a 39.55% stake in Unico-Desa Plantation Bhd as a credit negative. IOI would be acquiring the Malaysian palm oil producer through its unit IOI Plantation Sdn Bhd. IOI would also be offering a mandatory takeover deal to the rest of the shareholders of Unico-Desa.
Moody's said, "The cash acquisition will diminish IOI's existing cash positions. The total acquisition cost, including the remaining 60.45% stake, is approximately RM1bil, plus net debt of RM15mil. IOI reported RM2.9bil of cash and cash equivalents at the end of June, although it will receive about RM1.6bil from the proposed de-merger of its property businesses later this year."
Moody's pointed out that the acquisition would leave IOI with a reduced business diversity. The ratings agency also said the proposed pricing of MYR79,000 per hectare would be worth seven years of crude palm oil sales at USD700 per tonne. Plus, Moody's added that the plantations yields of Unico-Desa were at parallel with IOI levels, that management would not have that much scope to work on to extract even better yield results.
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