Thursday, October 27, 2011

Dutaland falls after IOI ends RM830m land deal

KUALA LUMPUR: Shares of DUTALAND BHD [] fell at the start of trade on Thursday, Oct 27 as investors reacted negatively to IOI Corp's decision to terminate the RM830 million land purchase deal.

At 9am, Dutaland was down 6.5 sen to 54.5 sen. There were 1.32 million shares done.

The FBM KLCI rose 3.75 points to 1,461.55. Turnover was 15.28 million shares valued at RM15.36 million. There were 77 gainers, 27 losers and 52 stocks unchanged.

On Tuesday, IOI Corp announced it terminated its proposed acquisition of 11,977.91 ha (29,597.42 acres) of oil palm PLANTATION [] land from Dutaland, citing 'non-compliance of certain terms and conditions'.

However, Dutaland has rejected the reasons for the termination.

ECM Libra Research said that as Dutaland does not accept the termination, a legal suit may ensue.

'Dutaland was expected to make a profit of RM511 million from the sale of the land and they may seek a specific performance relief from the court for the transaction to be completed,' it said.

The research house said at the price of RM69,294 a hectare, many considered the purchase to be a pricey

one. As such, some fractions of the market would perceive this to be a positive development.

ECM Libra Research said although the termination of the SPA is a setback to IOI's plan to increase its fresh fruit bunches, it may allow the group to look for better opportunities elsewhere. However, this issue between IOI and Dutaland will have to be resolved first.

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