09/08/2016 (The Edge Markets MY) - Astral Asia Bhd has called off the plan to expand its plantation activity by acquiring 35,000 acres of oil palm land in Sarawak.

In a filing with Bursa Malaysia today, Astral Asia said its subsidiary Astral Plantation Sdn Bhd and vendor Sima Properties Holdings Sdn Bhd were unable to reach an agreement on the deal.

They have decided to terminate the memorandum of agreement signed on May 10, it said, adding that the refundable deposit of RM500,000 will be refunded to Astral Plantation.

The memorandum of agreement was for Astral Asia to acquire Paramount Estate Sdn Bhd from Sima Properties. Paramount owns 80% of Paramount Pelita Kapit Sdn Bhd, which holds the provisional leases to 13 pieces of land in Sarawak measuring about 35,000 acres.

In its announcement on May 10, Astral Asia said the proposed acquisition represented the group's first oil palm plantation foray in Sarawak and would increase its total plantation land bank by 357% to 44,800 acres from 9,800 acres.

Astral Asia went on to say that in view of the land size of the prospective oil palm plantation, it would have to set up a palm oil mill to process its fresh fruit bunches at a later stage.

Astral shares closed 1 sen or 4.17% lower at 23 sen, giving the company a market capitalisation of RM151.8 million.