24/01/07 KUALA LUMPUR, Malaysia (AP) -- Malaysia's Synergy Drive Sdn. Bhd. said Wednesday it signed an agreement to buy the entire assets and liabilities of three companies in a bid to create the world's largest listed palm oil producer.
 
The signing of the pact follows the recent acceptance by the boards of Sime Darby Bhd., Golden Hope Plantations Bhd. and Kumpulan Guthrie Bhd. to accept Synergy's offer to buy their businesses, Synergy said in a statement.

Under the complex merger plan that would create a new company with a market value of 31 billion ringgit (US$8.7 billion, euro7.3 billion), Synergy is offering to swap new Synergy shares for shares of Sime, Guthrie and Golden Hope and their five subsidiaries.

"We are pleased with the progress that has been made, and we will commit the necessary energy and resources to ensure a smooth completion of the merger and integration of our businesses," said Synergy's chief executive officer designate, Ahmad Zubir Murshid.

The merger, pushed forward by the Malaysian government, is expected pool 600,000 hectares of oil palm fields in Malaysia and Indonesia owned by Sime Darby, Kumpulan Guthrie, Golden Hope Plantations and their units in a new company.

Shares of Synergy Drive will be listed on the stock exchange when the deal is completed.

Malaysia is the world's top producer of palm oil, currently being developed as a supplement to or replacement for fossil fuels. The merger is part of efforts to galvanize the industry amid stiff competition from rival Indonesia.

Some analysts, however, have been cautious of the deal, saying the integration process would be tough given high operating costs in Golden Hope and Kumpulan Guthrie. The three palm oil companies are currently owned by government fund manager Permodalan Nasional Bhd.

Palm oil exports are Malaysia's second-largest foreign exchange earner after electronics and were expected to bring in 21.7 billion ringgit (US$6 billion, euro5.1 billion) in 2006.