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December 14, 2006
The Malaysian's are vertically integrating
Taking a page from the Cargill/ADM playbook, there is a move afoot in Malasia to create vertically integrated palm company to produce food and fuel. Now things are getting interesting....
The deal is complex, and I'm still scrutinizing aspects of it, but some companies linked to the Malaysian billionaire Robert Kuok have announced an all-stock merger valued at approximately $4.3 billion. The merger makes the combined companies one of the world's most mammoth integrated palm oil plantations and oleochemical companies.
In an attempt to vertically integrate palm oil activities, the deal combines PPB Oil's sizable plantations with Wilmar's portfolio of refiners and biodiesel plants across the geography of Indonesia, Malaysia and Singapore.
The merger consolidates assets and activities in the palm oil industry in a way that will provide the company with close access to China, which is the world's biggest palm oil consumer.
The company will control 434,426 hectares of palm oil plantations and 25 refineries across Malaysia and Indonesia. They become an even more potent player in the emerging biodiesel market than was the case separately.
At some point next year the Singapore-based company will start operations at three biodiesel plants in the Riau island of Indonesia. Projected annual capacity for those plants is 1.05 million metric tons.
Posted by Martin at December 14, 2006 9:39 AM
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