18 September, 2002 (Business Times) - BRITISH-Dutch food and consumerproducts giant Unilever Plc NV is putting its Malaysian oil palm estates,totalling 21,700ha, on the block. They should fetch at least RM500million.

The proposed disposal is part of the group’s massive restructuringexercise to prune off all non-core businesses.

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

Wholly-owned subsidiary Palmol Plantations Sdn Bhd managing director andchairman Martin Rushworth said Unilever finds that the Malaysianoperations no longer fit into the group’s plans.

“We feel that the plantations do not sit well with our overall businessstrategy of promoting consumer brands,” he told Business Times in a phoneinterview yesterday.

Private bidding for the plantations will open next week.

Unilever operates oil palm estates in Sabah (13,500ha) and Johor(8,200ha). It owns 70 per cent of Palmol Plantations Sabah, and the SabahLand Development Authority the rest.

The Kluang-based Palmol Plantations Sdn Bhd is wholly-owned by the group.

Rushworth declined to provide an estimate of how much the plantationscould fetch, but industry sources say they are worth between RM500 millionand RM800 million.

“At a conservative estimate of RM34,000 per ha, we will be looking at aRM737.8 million deal. The selling price could be as high as RM37,000 perha,” said an industry executive.

Rushworth said Am Merchant Bank Bhd has been appointed to manage thedisposal process, including making a list of potential buyers.

PPB Oil Palms Bhd and Permodalan Nasional Bhd-controlled companies likeGolden Hope Plantations Bhd and Sime Darby Bhd will probably be on thelist, the executive said.

“PPB may be interested because it also has operations in Sabah,” but IOICorp Bhd and Kumpulan Guthrie Bhd are not likely to figure in the bidding,given their high gearings.

Unilever started its palm oil operations in Malaysia in the 1950s andcurrently employs about 1,000 workers.

Its landbank is all planted, and the oil palms have a balanced ageprofile.

Palmol replants every 10 years and produces about 120,000 tonnes of crudepalm oil annually. The company also operates a research and developmentcentre.

Apart from Malaysia, Unilever also owns oil palm plantations in Africa.

Meanwhile, another industry source believe that any deal entered into willinclude the condition that no workers are retrenched or laid off.

“It makes sense for Unilever to sell off Palmol as it is much cheapersimply to source for raw materials rather than operate your ownplantations.”

Unilever has been in the limelight twice this year. In January, it soldits Unimills edible oils refinery to Golden Hope Plantations Bhd forRM202.8 million, and just last month, its oils and fats division, LodersCroklaan BV, was bought by IOI Corp Bhd for RM814 million cash.

The refinery in the Netherlands is the world’s second largest suchfacility.

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.

It recorded sales of US$44.81 billion (US$1 = RM3.80) and earned a profitof US$1.04 billion last year. Worldwide, the group employed a total of295,000 workers in 2000.

Unilever was formed in 1930 when the Dutch margarine company, MargarineUnie, merged with British soapmaker Lever Brothers. Unilever maintainscorporate headquarters in both London and Rotterdam.

Among the group’s product brands are Lipton tea, Sunsilk shampoo, Breeze,Knorr, Dove soap and shampoo, Walls ice-cream, Calvin Klein and Valentinofragrances.

In Malaysia, Unilever produces and markets a range of household productsthat use refined palm oil, palm kernel and oleochemicals as base material.