KPF nod for FGVH bid to buy 51% of Felda Holdings

However, Felda Global Ventures Holdings Bhd will also seek approval from Cooperative Commission of Malaysia and other relevent authorities before making its next move.

by Azli Jamil

PETALING JAYA: Felda Global Ventures Holdings Bhd’s (FGVH) bid to acquire 51% of Felda Holdings Bhd (FHB) for RM2.2 billion has received the go-ahead by Koperasi Permodalan Felda Malaysia Bhd (KPF).

“KPF delegates had in the EGM held on Oct 27, 2013, approved the proposal to sell 112.2 million ordinary shares of RM1 each in FHB, representing 51% equity interest in FHB, to FGVH,” said FGVH in a filing to the exchange yesterday.

FGVH said the approval of the Cooperative Commission of Malaysia and/or any other relevant authority (if required) is needed and in adherence to the principles of Shariah.

FGVH has not announced the date of the company’s EGM to discuss this issue. The deal even attracted Parliament’s attention whereby Deputy Minister in the Prime Minister’s Department Razali Ibrahim said the interests of the settlers are protected.

“KPF is the best cooperative, in terms of distributions (of dividends) and operations. We will ensure that (the shares purchase) will benefit both FGVH and KPF members,” Razali told Parliament after Bagan MP Lim Guan Eng asked how the RM2.2 billion would be used to ensure the same steady dividends for the settlers.

To recap, FGVH announced the acquisition of Oct 11, 2013, for the 112.2 million shares at RM19.61 per share, totalling RM2.2 billion to be paid in cash.

FGVH will be using a combination of its initial public offering (IPO) proceeds and borrowings to pay KPF.

The company rationalised the acquisition as “to have complete control of the entire plantation value chain and to attain operational efficiency, as well as to achieve synergies within the plantation value chain of the FGVH group of companies”.

The deal attracted the attention of research houses who are upbeat on the acquisition, saying it is in the right direction, citing earning enhancement as the main reason.

The research houses expected the acquisition to be earnings- accretive, adding circa 5% to 10% to financial year 2014 (FY14) net earnings.

FHB is the world’s largest producer of crude palm oil (CPO) by value, accounting for 8% of the world’s CPO production.

For its FY12, FHB recorded a profit after tax of RM484.2 million on a turnover of more than RM18 billion.