FGV's plan to take control of KPF units deemed fair
Quantephi said it recommends that shareholders vote in favour of the resolution at the forthcoming EGM.
PETALING JAYA: Independent adviser Quantephi Sdn Bhd has deemed FGV Holdings Bhd 's proposed RM229.8mil acquisition of full control of eight subsidiaries from Koperasi Permodalan Felda Malaysia Bhd (KPF) as 'fair and reasonable' and not detrimental to non-interested shareholders.
The assessment was provided in an independent advice letter included in FGV's shareholder circular filed with Bursa Malaysia yesterday.
The deal, first announced on May 23, will see FGV, through its 72%-owned unit FGV Palm Industries Sdn Bhd (FGVPI) and wholly owned subsidiary Felda Holdings Bhd (FHB), acquiring the remaining stakes in several companies involved in palm oil milling, refining, logistics, research and development, and ancillary services from KPF.
KPF is the investment arm of the Federal Land Development Authority (Felda) and also FGV's largest shareholder. FGVPI will acquire the remaining minority interests in three companies – FGV Kernel Products Sdn Bhd (16.67%), FGV Refineries Sdn Bhd (33.33%) and FGV Marketing Services Sdn Bhd (49%) – for RM54.7mil.
Meanwhile, FHB will purchase the remaining stakes in five companies – FGV Agri Services Sdn Bhd (23.08%), FGV Transport Services Sdn Bhd (49%), FGV Security Services Sdn Bhd (49%), FGV Prodata Systems Sdn Bhd (20%) and FGV Rubber Industries Sdn Bhd (28.57%) – for RM175.05mil.
'We are of the opinion that, taken as a whole, the proposed acquisitions are fair and reasonable and are not detrimental to the interest of the non-interested shareholders and non-interested directors of FGV Group,' Quantephi said in its report.
'Accordingly, we recommend that they vote in favour of the resolution at the forthcoming EGM.'
Quantephi noted that the purchase consideration exceeds the proportionate adjusted net asset value (NAV) of RM209.3mil primarily due to a 25% premium attributed to FGV Agri Services and the inclusion of FGV Rubber Industries, which has a negative NAV of RM8mil.
It further explained that FGV Agri Services is one of Malaysia's largest producers of oil palm seeds with an estimated 40% share of the domestic market, and has recorded consistent profitability with an average profit after tax (PAT) margin of 15.6% and dividend yield of 7.7% over the past four financial years.
In comparison, it said FGV Transport Services and FGV Kernel Products recorded average PAT margins of 2.4% and 0.5%, respectively, and lower average dividend yields of 4.2% and 5.5% over the same period.
The circular comes after Felda, on May 26, launched a fresh unconditional voluntary takeover offer to acquire all FGV shares it and its parties acting in concert do not already own at RM1.30 a share – the same price as its failed bid in 2020.
Felda's renewed push to privatise FGV followed Bursa Malaysia's rejection of its application for more time to rectify its low public shareholding spread, which has remained below the 25% minimum since 2021.
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FGV's plan to take control of KPF units deemed fair
Quantephi said it recommends that shareholders vote in favour of the resolution at the forthcoming EGM. PETALING JAYA: Independent adviser Quantephi Sdn Bhd has deemed FGV Holdings Bhd 's proposed RM229.8mil acquisition of full control of eight subsidiaries from Koperasi Permodalan Felda Malaysia Bhd (KPF) as 'fair and reasonable' and not detrimental to non-interested shareholders. The assessment was provided in an independent advice letter included in FGV's shareholder circular filed with Bursa Malaysia yesterday. The deal, first announced on May 23, will see FGV, through its 72%-owned unit FGV Palm Industries Sdn Bhd (FGVPI) and wholly owned subsidiary Felda Holdings Bhd (FHB), acquiring the remaining stakes in several companies involved in palm oil milling, refining, logistics, research and development, and ancillary services from KPF. KPF is the investment arm of the Federal Land Development Authority (Felda) and also FGV's largest shareholder. FGVPI will acquire the remaining minority interests in three companies – FGV Kernel Products Sdn Bhd (16.67%), FGV Refineries Sdn Bhd (33.33%) and FGV Marketing Services Sdn Bhd (49%) – for RM54.7mil. Meanwhile, FHB will purchase the remaining stakes in five companies – FGV Agri Services Sdn Bhd (23.08%), FGV Transport Services Sdn Bhd (49%), FGV Security Services Sdn Bhd (49%), FGV Prodata Systems Sdn Bhd (20%) and FGV Rubber Industries Sdn Bhd (28.57%) – for RM175.05mil. 'We are of the opinion that, taken as a whole, the proposed acquisitions are fair and reasonable and are not detrimental to the interest of the non-interested shareholders and non-interested directors of FGV Group,' Quantephi said in its report. 'Accordingly, we recommend that they vote in favour of the resolution at the forthcoming EGM.' Quantephi noted that the purchase consideration exceeds the proportionate adjusted net asset value (NAV) of RM209.3mil primarily due to a 25% premium attributed to FGV Agri Services and the inclusion of FGV Rubber Industries, which has a negative NAV of RM8mil. It further explained that FGV Agri Services is one of Malaysia's largest producers of oil palm seeds with an estimated 40% share of the domestic market, and has recorded consistent profitability with an average profit after tax (PAT) margin of 15.6% and dividend yield of 7.7% over the past four financial years. In comparison, it said FGV Transport Services and FGV Kernel Products recorded average PAT margins of 2.4% and 0.5%, respectively, and lower average dividend yields of 4.2% and 5.5% over the same period. The circular comes after Felda, on May 26, launched a fresh unconditional voluntary takeover offer to acquire all FGV shares it and its parties acting in concert do not already own at RM1.30 a share – the same price as its failed bid in 2020. Felda's renewed push to privatise FGV followed Bursa Malaysia's rejection of its application for more time to rectify its low public shareholding spread, which has remained below the 25% minimum since 2021.
