Plantation giants merger raises concerns
Malaysiakini.com
Nov 29, 2006

Parti Keadilan Rakyat (PKR) has expressed concern over the merger of plantation giants Sime Darby Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd.

In a statement today, party treasurer Abdul Khalid Ibrahim said while mergers and takeovers are part and parcel of the capital market, the focus should be on increasing efficiency.

At the same time, he added, the rights of minority shareholders must be taken into consideration and they should be given a chance to make choices.

Khalid, who is the former chief executive officer of Pemodalan Nasional Bhd (PNB) and Kumpulan Guthrie, said there are various statements, including from government leaders, on the merger which are cause for concern.

“Firstly, the proposal was not initiated by one of the three companies or its substantial shareholder PNB but rather by an investment bank,” he noted.

He said PNB’s statement indicating that it had no idea about the proposal was ‘very frightening’.

“PNB is a major shareholder in two of the companies and has a substantial holding in the other. This calls into question PNB’s ability to manage and control its assets.

“Surely the statement (by PNB that it had no idea about the proposal) came as a shock to the more than eight million investors in various PNB’s trust funds,” he added.

Khalid said it does not make sense that PNB could be in the dark about the merger proposal.

“Not only do they have board representation in all three companies, but the chairperson of PNB (Ahmad Sarji Abdul Hamid) is also the chairperson of two of the companies involved,” he added.

Insider trading?

Secondly, he said, in order to undertake the studies needed to come up with this proposal, Synergy Drive - the special purpose vehicle to take over and merge the three companies - must have needed information from the companies involved.

If the information used was not restricted to public documents than the issue of insider trading comes to the fore.

“The board of directors of all the three companies involved should make a public announcement that this matter was never discussed at the board meetings and the management has assured the board that no information was passed to outside parties.

“From PNB’s statement, it can be deduced that PNB and the three companies are not involved in the preparation of the proposal by Synergy Drive.

“In order to evaluate the offer by Synergy Drive, the board of directors of the three companies must make sure Synergy Drive gives an undertaking that all professional advisory expenses especially the merchant bankers (investment bankers) advising independent directors of the respective companies and secretarial expenses are borne by Synergy Drive,” he added.

Khalid’s third question centred on the statements made by Deputy Prime Minister Najib Abdul Razak and later Prime Minister Abdullah Ahmad Badawi in support of the merger when PNB was still unaware about it.

“How could have this happened when the prime minister and his deputy are both trustees of Yayasan Pelaburan Bumiputera, the parent entity of PNB?” he asked.

The PKR treasurer said Bursa Malaysia, the Securities Commission and the minority shareholders watchdog must take all steps necessary to ensure the interest of minority shareholders are not compromised in this process.

The merger creates the world's largest palm oil firm and is aimed at boosting Malaysia's status as a top palm oil producer amid growing regional competition.

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