The independent directors of New Britain Palm Oil have urged shareholders in the UK-listed palm oil processor to reject the bid by its largest investor to take a majority stake in the company.

New Britain Palm Oil’s directors said the GBP5.50-per-share offer from plantation owner Kulim, which already owns just under 49% of the company, was “not fair or reasonable”. Malaysia-listed Kulim, which wants to take its stake in New Britain Palm Oil to 69%, said the offer was more than 14% above the company’s share price on 19 June, the day before it made its bid.

However, New Britain Palm Oil’s independent directors listed a series of “negative aspects” of the offer. They said the bid “significantly undervalues” New Britain Palm Oil. The directors claimed a report from an independent adviser suggested the Kulim offer was “more than 15% below the low end of the fair market value range” for the company’s shares.

Accepting Kulim’s offer would, the directors claimed, also “deprive ….. shareholders of exposure to NBPOL’s growth opportunities, including benefits from any future price increases in palm oil prices above the recent historical lows”.

The directors acknowledged the offer was a “premium” to New Britain Palm Oil’s current share price. They also said the bid “highlights market undervalue”. The directors added: “The offer may improve market sentiment towards the NBPOL shares by demonstrating that the company’s major shareholder is supportive of its future growth prospects.”

However, the independent directors said the “negative aspects” of the offer “far outweigh any advantages” and urged investors to reject the bid.