27/5/07 SINGAPORE (AFP) - Indofood Agri Resources will buy Indonesian oil palm plantation firm London Sumatra for 1.59 billion Singapore dollars (1.05 billion US), the Singapore-listed firm said.

In a statement to the stock exchange dated Saturday, Indofood Agri Resources said it will buy an initial 64.4 percent in London Sumatra from various controlling shareholders for about one billion dollars.

It will then make an offer for the remaining stake for 589 million dollars, said Indofood Agri, which has an extensive agricultural portfolio including oil palm cultivation.

"The target group is one of the largest producers of crude palm oil (CPO) in Indonesia," the company said.

"The proposed acquisition will enable the group to expedite its strategy of increasing its oil palm planted area to 250,000 hectares (617,500 acres) and achieving self-sufficiency in meeting the group's CPO requirements."

Analyst Robert Adair from CIMB brokerage in Singapore said the acquisition was a good strategic fit for Indofood Agri Resources.
 
"We believe London Sumatra is a good fit for Indo Agri as its estates are well managed and some of its oil palm estates are located in the same region as Indo Agri's current mature oil palm estates, providing opportunities for synergies," Adair said.

He said in a report the deal will allow Indofood Agri Resources to "expand its planted oil palm estates by 84 percent."

At 11:40 am (0340 GMT), Indofood Agri Resources share were up four cents at 1.31 dollars on the local stock market