KUALA LUMPUR (Nikkei Markets) -- Malaysia's Sime Darby, the world's largest palm oil producer by acreage, said Tuesday it is selling the entire 40% stake in Seriemas Development for 625 million ringgit ($146.11 million) to its largest shareholder.
The stake sale to Permodalan Nasional will yield a gain of 305 million ringgit after deducting non-controlling interests and cost of disposal, Sime Darby said in an exchange filing. If completed, the consolidated earnings per share of Sime Darby is expected to increase by about 4.48 Malaysian cents.
"The proposed disposal is in line with Sime Darby's strategy to unlock value through monetisation and opportunistic divestments, while enabling Sime Darby to reduce its borrowings via the proceeds," the company said.
The divestment comes at a time when Sime Darby is in the midst of restructuring its operations that range from plantations to healthcare. The conglomerate aims to spin off its plantations and property businesses for separate listings on the Malaysian stock exchange this year.
Sime Darby will remain listed post-restructuring and hold on to its industrial equipment, automotive, logistics and healthcare businesses. Sime Darby's mainstay plantation business accounted for more than a quarter of its total revenue of over $10 billion in the fiscal year 2016 while property made up 7%.
Analysts said the disposal of stake in Seriemas is in line with Sime Darby's aim to discard non-core assets in which the company has no controlling interest.
"In the past few analyst briefings, the management has indicated that they want to dispose non-strategic property in the last few analyst briefings," said Kenanga Investment Bank's analyst Voon Yee Ping. "This was not a surprise to me."
Seriemas is currently developing three out of its 14 plots and the company has investments in two malls and two hotels.
Sime Darby has sold at least 500 million ringgit worth of land to Permodalan Nasional since last year and disposed its vehicle distribution business in Australia and New Zealand. The company has also divested industrial assets in Australia, properties in Singapore, and part of its stake in listed Eastern & Oriental.
Shares of Sime Darby fell 0.7% to 9.38 ringgit on Tuesday, while the benchmark FTSE Bursa Malaysia KLCI ended 0.3% higher.
--Jason Ng
