Why Noble's stalled sale of its plantations to Wilmar surprised analysts

It would have sold its 53.74% stake.

According to CIMB, Noble Group’s planned sale of its 53.74% stake in the JV entity, Noble Plantations, to Wilmar has been called off as conditions have not been satisfied before a deadline. 

The venture holds a majority interest in PT Henrison Inti Persada, which owns around 23k ha of land in Papua. It was reported that the group failed to obtain certain merger clearances.

Here's more from CIMB:

This is a surprise to us and represents the first major case in Indonesian palm oil estate M&A in recent times where a deal has been called off due to lack of regulatory approvals.

This also comes at a time when there is talk of plans by the Indonesian government to limit plantation companies’ planted acreage to 100k ha. We suspect that the government may be taking the proposed change into consideration when reviewing current proposals.

If our suspicion is correct, this is negative for large companies looking to expand through M&A. While the termination of this deal does not affect our earnings forecasts for Wilmar which owns 183,623ha of planted estates in Indonesia as at 31 Mar 2013, we would be negative on it if it implied a more difficult climate for expansion of estates in Indonesia.