Browns Investments PLC acquires Udapusselawa Plantations PLC and Hapugastenne Plantations PLC

Published Date : 24-Dec-2021

Browns Investments PLC yesterday announced the acquisition of shares worth 90% in Udapusselawa Plantations PLC and Hapugastenne Plantations PLC for Rs. 1.9 billion from Finlays Sri Lanka, who were present in the country for 128 years. 

The deal is at Rs. 42 per Udapusselawa (UDPL) share and Rs. 28.30 per Hapugastenne (HAPU) share. Price paid for UDPL is 81% premium to the Net Asset Value of Rs. 23.17; and for HAPU, it was 154% premium to NAV of Rs. 11.13. The transaction will be executed shortly. The sale will mark the exit of the 1893-established Finlays from the plantation business though it will continue with other businesses.

Post-announcement, Udapussellawa Plantations share price gained by 25% or Rs. 6.70 to close at Rs. 33.60, whilst Hapugastenne Plantations also rose by 25% or Rs. 4.30 to close at Rs. 21.70. Strangely, the two counters more-or-less saw trading of 66,000 shares each. Browns Investments’ share gained by only 2% or 30 cents to Rs. 14.30. The share price of Brown & Company recorded a gain of Rs. 13.25 (3.90%) to close at Rs. 353.25.

BIL is to make a mandatory offer to buy the remaining stake in both companies. Udapusselawa's public float is 10%, held by 12,121 shareholders; and Hapugastenne's public float is 10%, held by 21,393 shareholders.

High net worth investor Imtiaz Buhardeen said the deal is likely to re-rate the plantation sector stocks and trade at higher prices.

UPL and HPL comprises of 30 tea farms and 20 processing centres which sit within six of the seven agro-climatic regions of Sri Lanka.

In a statement, Finlays said there will be no immediate change for any of the employees of either plantation company, and Browns intends to continue to run the business as it has been operated until now.

“Finlays will continue to be represented in Sri Lanka by Finlays Colombo Ltd., its tea blending and packing operation, which sources teas from multiple origins, including Hapugastenne and Udapussellawa via the Colombo auction. This means that Finlays is able to continue to provide an uninterrupted service to customers,” the statement said. 

Finlays Group Managing Director Guy Chambers said: “After careful consideration and a rigorous selection process, we have agreed to transfer ownership of our Sri Lankan Tea Estates to Browns Investments PLC.” 

“As a Sri Lanka-based investment firm with a strong track record in agriculture, Browns Investments PLC is ideally placed to unlock the long-term value of Hapugastenne Plantations PLC and Udapussellawa Plantations PLC. These Sri Lankan farms have played an important role in Finlays’ history, and we are sure that they will continue to flourish under the ownership of Browns Investments PLC. I would like to thank our tea farm colleagues in Sri Lanka for their passion and commitment, and wish them well for the future,” Chambers added.

BIL Director Kamantha Amarasekera said: “Hapugastenne Plantations and Udapussellawa Plantations are two of the best managed and productive plantation companies in Sri Lanka, and we are proud to be associated in their future journey. We will work with Finlays to ensure a smooth transition between the two groups. We warmly welcome the management and staff of Hapugastenne Plantations and Udapussellawa Plantations to the Browns family, which has a business heritage dating back to 1875.”

BIL also owns Maturata Plantations Ltd., which manages 19 estates spread across 11,595 acres mainly with tea and a total forestry extent of 1,600 hectares has 1,195 hectares of commercial timber, 380 hectares of fuelwood and also 405 hectares of cinnamon. BIL is also engaged in fertiliser, crop care and seeds business via AgStar PLC. Separately, BIL’s related parties Brown and Company and LOLC own a 49% stake in Galoya Plantations Ltd., producing sugar.

With a history spanning over 125 years in Sri Lanka, Finlays has 7,285 hectares of tea farms and grows over 10 million kilos of tea annually via the two listed companies, of which around 7 million kilos are exported to customers in over 30 countries. It has 20 tea processing factories in its farms producing, black, green and oolong teas and a modern packing plant.

Finlays Sri Lanka is part of Swire Group, a highly diversified global business group. Global firm Finlays was founded in 1750 and is a leading independent B2B manufacturer and supplier of tea, coffee and botanical solutions to beverage brand owners worldwide. Apart from Sri Lanka, Finlays has tea plantations in Kenya, Argentina and China with a combined hectarage of 27,000.  


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