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* This story has been updated to correct the introduction and title *
KUALA LUMPUR (Dec 8): After all the uproar over the Cabinet approval of the Federal Land Development Authority (Felda) to terminate its land lease agreement (LLA) with FGV Holdings Bhd, and how it wanted to take over of the listed unit oil. Palm mills, there is now a new plot twist adding to the speculation about the ending of Felda.
Felda plans to make a mandatory takeover offer to FGV’s minority shareholders at RM 1.30 per share, should it be able to increase its stake in the listed unit.
On behalf of Felda, which owns a 21.24% stake in FGV, Maybank Investment Bank Bhd announced today that Felda is purchasing a 6.1% stake from Kumpulan Wang Persaraan (Diperbadankan) (KWAP) and a stake from 7.78% held by Urusharta Jamaah Sdn. Bhd for RM658 million in cash. This brings Felda’s stake to 35.12%.
Upon completion of the proposed share acquisition, Felda, together with the parties acting in concert (PAC) with it, will collectively own more than 50% of the shares of FGV, said Maybank IB, triggering a mandatory takeover offer ( MO). He did not name the PACs.
To pave the way for the share purchase, Felda entered into “conditional” share purchase agreements with KWAP and Urusharta Jamaah. The conditions attached to these share purchase agreements are not known.
Maybank IB said that Felda will deliver the mandatory offer notice to the FGV board, once the share purchase agreements become unconditional.
More importantly, Felda did not disclose whether it intends to maintain FGV’s listed status after the acquisition. This is essential information for minority shareholders.
When The edge For clarification on the matter, Maybank IB responded via text message: “See press release. We have nothing to add beyond the declaration. I hope you understand.”
However, the investment banker has made it clear in the announcement that the mandatory takeover offer will not lead to a takeover bid for FGV’s 51% publicly traded subsidiary MSM Malaysia Holdings Bhd.
Interestingly, FGV’s share price was on a steady rise prior to the proposed share purchase announcement, going from RM1.03 on November 2 to RM1.27, just before the announcement. The offer price marks a premium of 2.36% or three sen from RM1.27.
Maybank IB explained that the proposed share purchase is part of Felda’s plan to transform and restructure itself and its related companies to strengthen its core business in the plantation sector.
Maybank IB noted that Felda, on October 30, announced that it was embarking on a transformation plan to make Felda financially independent and sustainable, which includes improving Felda’s basic income from its lands. This potentially involved terminating their ALL with FGV and taking over related palm oil plants, subject to satisfactory discussions with FGV.
The LLA involves farms owned by Felda for a total of 350,733 ha, which were leased to FGV for 99 years as of November 1, 2011.
“At the same time, the proposals [on share purchase] were considered, and based on the advice of financial and legal advisors, the proposals represent the most efficient and effective approach for Felda, ”he said.
In short, it has been more than a month since the special task force led by Tan Sri Abdul Wahid Omar, who is also president of Bursa Malaysia, announced the termination of the LLA. FGV, however, has not yet received notification of the termination of LLA.
Furthermore, Felda has been silent about the compensation that FGV will receive as a result of the termination, which is material information for a publicly traded company with thousands of minority shareholders, including smallholders who subscribed to its initial public offering at RM4. 45 per share in 2012.
Put bluntly, Felda seems to keep her letter close to her chest for a few reasons. However, given that its transformation plan involves FGV, meeting the listing requirements on corporate governance and disclosure should not be taken lightly.
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