Wilmar International Limited Acquires Natural Oleochemicals Sdn Bhd

The acquisition of Natoleo adds Malaysia to Wilmar’s existing network of oleochemical production bases. In China where demand is expected to grow strongly in the future, Wilmar is the largest producer of oleochemicals with plants in four locations.

Jul 22 2010 --- Wilmar International Limited wishes to announce that its 100% subsidiary PGEO Group Sdn. Bhd has entered into a sale and purchase agreement dated 21 July, 2010 (“Agreement”) to acquire 91.38% of Natural Oleochemicals Sdn Bhd (“Natoleo”) from Kulim (Malaysia) Berhad, a company listed on Bursa Malaysia, for a cash consideration of Malaysian Ringgit 450,000,000.

Completion of this transaction is expected to take place no later than 90 days from the date of the Agreement, and is subject to certain conditions including regulatory approvals from the Ministry of International Trade and Industries Malaysia. Funding for this acquisition will be from internal sources of funds and bank borrowings.

Background on Natoleo

Based in Pasir Gudang, Johor, Natoleo is one of the world’s largest oleochemicals producers with significant market share in Europe and Asia and a growing presence in USA. Natoleo enjoys a reputation for industry-leading technical and operational know-how and its large, high quality client list includes many of the world’s leading multi-national corporations.

Natoleo’s main feedstocks are crude palm kernel oil and palm stearin. Its products such as glycerine, soap noodles, fatty acids, and esters are widely used in diverse industries such as detergents, home care, cosmetics and toiletries, plastics, pulp and paper, pharmaceuticals, food additives, grease and lubricants, paints and coatings, rubber and latex and polyolefins. The remaining 8.62% of Natoleo is owned by the National Land Finance Co-operative Society, an
independent third party.

Investment Rationale

1)Major player in a rapidly growing industry

The oleochemical industry is experiencing steady growth due to sustained economic development and increased global demand for an eco-friendly functional product which is viewed as a sustainable alternative to petrochemical products.

In 2009, Malaysia accounted for approximately 25% of the world’s production capacity of fatty acids and Natoleo accounted for approximately 20% of Malaysia’s production capacity. Wilmar believes that the acquisition of Natoleo allows it to consolidate its leading position in the global fatty acids market and entrenches Wilmar as Asia’s dominant oleochemicals company with a market share of almost 35% of Asian fatty acid production capacity.

2)Significant synergies with Wilmar’s existing businesses

Natoleo’s well established customer networks in Europe, USA and China are complementary to Wilmar’s, and its sizeable product portfolio and strength in high value-add downstream products enhances the company’s growth in oleochemicals.

The acquisition of Natoleo adds Malaysia to Wilmar’s existing network of oleochemical production bases. In China where demand is expected to grow strongly in the future, Wilmar is the largest producer of oleochemicals with plants in four locations. In Indonesia, Wilmar operates its recently completed oleochemical facility in Gresik. This network makes Wilmar a dominant oleochemicals producer.

DMG & Partner Securities Pte Ltd acted as the financial advisor to Wilmar in this transaction.