Malaysian plantation major, Kuala Lumpur Kepong Bhd (KLK), is reportedly eyeing a bigger stake in the UK-based chemicals firm, Synthomer Plc, in a bid to expand its specialty chemicals business, cite sources privy to the matter.
According to reports, KLK is in talks with at least one financial advisor to look into possibly increasing its current stake of 26.3% in the British firm, according to those familiar with the matter.
The stake purchase will include primary and secondary shares, and it has not yet been clarified whether the Malaysian firm will acquire a controlling stake.
Currently, KLK is the largest stakeholder of Synthomer, which, according to data from Refinitiv, has a market capitalization of $604.1 million, followed by the UK arm of UBS Asset Management with a 5.01%, and M&G Investment Management with 4.99%.
Synthomer and Kuala Lumpur Kepong have not commented on the matter.
As per data from Refinitiv, KLL is one of the biggest rubber and oil palm companies in its home country, having a market valuation of $4.78 billion
The company owns around 300,000 hectares of planted area for crop plantation, spread across Malaysia, Indonesia, and Liberia, as per KLK.
According to the sources, a larger stake in Synthomer will expand KLK’s specialty businesses and also increase its earnings contribution from the British firm.
Synthomer, a London-listed company, contributed an equity profit worth RM260.6 million ($54.86 million) to KLK in the financial year ending on 30th September 2021, as per KLK’s latest annual report.
The chemicals firm has been aggressively expanding as it aims to become a leading global maker and supplier of polymers. In 2021, it took over the adhesive resin business of the American chemical firm Eastman Chemical Company for $1 billion.
Synthomer’s London-listed shares rose 4.8% after the news of KLK raising its stake came out. To date, the British firm’s stock has fallen 70.1%.