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KUALA LUMPUR (March 16): Investors bought shares in FGV Holdings Bhd after its privatization exercise failed due to poor acceptance of the takeover offer made by its majority shareholder, the Federal Land Development Authority (Felda) at RM 1.30 per share.
The stock closed 27 sen or 20.77% higher to a more than a year high of RM1.57, with 58.19 million shares changing hands, giving it a market capitalization of RM5.73 thousand. millions.
The share price soared 25% shortly after today’s opening bell as the group missed the rally most of its peers enjoyed in recent months due to strong palm oil prices. crude (CPO).
The stock previously rose to an intraday high of RM1.67, a 28% jump from its previous close of RM1.30.
In contrast, FGV’s sugar refining company, 51% -owned MSM Malaysia Holdings Bhd, experienced a reverse reaction, falling eight sen or 4.32% to RM 1.77 from its previous close of RM 1.85.
Yesterday, FGV said that Felda only got an 81% equity stake in the plantation group as the offering closed at 5pm, of the 95% required to trigger a mandatory share takeover and make the listed company private.
Felda’s purchase offer was RM1.30 per share, which values FGV at RM4.74 billion, a 71.43% discount from its 2012 initial public offering price of RM4.55 per share.
This was considered to be an unattractive offer price, especially in the face of strong CPO prices.
“We believe that one of the factors contributing to the failed attempt to take over FGV was the unattractive bid price of RM1.30. With current CPO prices topping RM4,000 a tonne, also an all-time high, shareholders minorities may have been seeking a higher valuation, “MIDF Research wrote in a note today.
MIDF maintains its “neutral” option on the stock with an unchanged target price of RM1.31.
The offer, which was first announced on December 7, 2020 and became unconditional on December 23, saw its deadline postponed three times from the original date of February 2 to March 15.
Following the failed attempt, Felda will now have to address the minimum requirement for FGV’s public stake spread. Bursa Malaysia requires a public stake differential of 25% versus FGV’s 19% currently.
“Despite Felda’s failed FGV acquisition attempt, going forward, we anticipate the group’s earnings to remain optimistic, driven by favorable CPO prices with modest FFB (fresh fruit bunches) production,” he said. MIDF.
On top of that, the expected higher average sales prices of refined sugar and an increase in sales volume should help MSM to further increase their contribution to FGV in the coming quarters, MIDF added.
“Although the United States bans imports of palm oil from FGV over forced labor allegations, we believe the group’s outlook will remain resilient as FGV will review the appointment of an independent audit firm for an audit of operations within a reasonable period of time, and continue to engage with US Customs accordingly once an independent auditor has been appointed, “MIDF said.
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