Palm oil consolidation
The creation of the world's largest palm oil company is yet another indication of the increasing consolidation in the agribusiness industry. Palm oil, the extract of the fruit of a specific species of West African palm tree, though little recognized in the US, is a global monster, the second most widely produced edible oil after soybean oil. Aside from its widespread use as a cooking oil and in such products as margarine, palm oil is been looked at as a source of biodiesel. That interest along with fears of lower soybean production, has helped push palm oil price to 8-year highs recently.
The deal that is creating the new palm oil powerhouse is in Malaysia, where palm oil is the second most important export (after electronics). Malaysia is the main producer of palm oil. The three companies, Synergy Drive (whose name will be used for combined enterprise), Sime Darby, and Sime UEP Properties together have an income of $8.7 billion, making it Malaysia's fifth-biggest company.
Palm oil is a major world commodity, and this deal, pushed by the Malaysian government, is in line with similar moves in other commodities.
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