18 September, 2002 (Business Times) - THE list of prospective buyers forUnilever Plc NV’s oil palm estates in Malaysia is said to have grown to11, with AmBank Group executive chairman Tan Sri Azman Hashim among thepossible bidders.

The other parties believed to be interested are Sabah Land DevelopmentBoard, Tradewinds (M) Bhd, Pan-Century Oleochemicals Sdn Bhd, Kuala LumpurKepong Bhd, IOI Corp Bhd, US-based trading giant Cargill Inc and THPlantations.

PPB Oil Palms Bhd and Permodalan Nasional Bhd (PNB)-controlled Golden HopePlantations Bhd and Sime Darby Bhd had earlier been tipped by industrysources as likely contenders.

Tradewinds is a listed subsidiary of Pernas International Holdings Bhd,while TH is the plantation division of Tabung Haji.

“Azman might be interested given his former involvement in the industrywhen he sat on the board of France-based Socfin Plantations Bhd a fewyears back,” a source said.

Business Times yesterday reported that the British-Dutch food and consumerproducts giant is putting its Malaysian oil palm estates, totalling21,700ha, on the block.

They are estimated to be worth at least RM500 million.

Unilever controls 70 per cent of San-dakan-based Palmol Plantations Sabahwhich operates 13,200ha of oil palm estates in the state. Sabah LandDevelopment Board owns the rest.

The multinational’s wholly-owned Palmol Plantations Sdn Bhd meanwhile has8,200ha of estates in Johor.

An industry source had earlier discounted IOI Corp and Kumpulan GuthrieBhd as possible bidders owing to their high gearings.

“IOI Corp cannot be ruled out... you never know what is in executivechairman Tan Sri Lee Shin Cheng’s mind,” an analyst said.

All the big boys in the plantation sector would certainly be interested asthe estates are on fertile land and perfect for palm oil production, hesaid.

“The Kluang land might prove be a bit expensive compared to Sabahthough... it is a prime location more suited for property development.”

In the case of Golden Hope and Sime Darby, their edge is that funding isnot an issue, as both can either raise the money themselves or turn toPNB.

“PPB could also be a frontrunner given that it is already operating inSabah.

“As for KLK, the question is more of whether they want to expand. Italready has plantation operations in Indonesia,” the analyst said.

AmMerchant Bank Bhd, appointed by Unilever to manage the divestmentexercise, is drawing up a list of potential buyers for the plantations.Private bidding is expected to open next week.

“AmMerchant will screen all prospective buyers and shortlist thecandidates,” said a source privy to the process.

Unilever, with operations in 40 countries, had announced a sweepingreorganisation in February 2000 aimed at boosting sales by between 5 percent and 8 per cent a year and achieving profit margins of between 16 percent and 17 per cent by 2004.

The proposed disposal of the Malaysian plantations is part of the group’smassive restructuring exercise to scale back non-core businesses.

It wants to focus and build on its core strength in consumer productsmanufacturing and distribution.

Unilever, currently selling 1,200 leading brands of products, plans tonarrow the range down to 400 over the next two years.

It recorded sales of US$44.81 billion (US$1 = RM3.80) and earned a profitof US$1.04 billion last year.

Unilever had in January sold its Unimills edible oils refinery to GoldenHope Plantations Bhd for RM202.8 million, and just last month, its oilsand fats division, Loders Croklaan BV, was bought by IOI Corp Bhd forRM814 million cash.

“As companies go global, it does not make sense to rake in a revenue ofUS$44 billion only to post a profit of US$1 billion,” said a sectoralanalyst.

“In India for example, Unilever is very strong in the detergent and soapindustry. But it also faces intense competition upstream from other soapmakers.

“It would make better business sense for Unilever to move away fromupstream activities, and just buy the raw materials and concentrate onselling.

“In the case of palm oil, it would be cheaper to buy from traders inMalaysia and Indonesia than run your own estates.”