KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) says the signing of the definitive documents for the purchase of Indonesia-based PT Eagle High Plantations Tbk has been extended.
FGV said on Friday the company and the vendors “are still in the midst of negotiating the terms of the definitive documentation and aim to sign the definitive documents no later than Nov 30”.
The earlier deadline was Oct 31.
According to a Bloomberg report, FGV may ask for a lower price to acquire Eagle High taken into account issues discovered during the due dilligence exercise.
In June, FGV proposed to acquire a 37% stake in Eagle High for US$680mil via US$632mil cash and the balance of US$47mil from the issuance of 95 million new FGV shares from Rajawali Group. It will also acquire a 95% stake in Rajawali’s sugar business for US$67mil cash.
Both FGV and Rajawali Groups have inked a preliminary agreement and said they planned to announce a final pact by mid-August, a deadline that has since been extended to Oct 31.
FGV, which is on an aggressive land bank expansion mode, hopes to tap into Eagle High, which has a total land bank of 425,000ha with 67% in Kalimantan and the rest spread across Papua, Sulawesi and Sumatra.
To put into prespective, the FGV-Eagle High deal has come under heavy scrutiny lately with plantation analysts mostly negative on the acquisition and have deemed it as an expensive deal.
FGV is buying a 37% stake in Eagle High for US$680mil. However, the entire company has a market capitalisation of US$1.04bil (in June), indicating a hefty premium.
Furthermore, Eagle High shares have fallen 42% since the initial deal was announced, while crude palm oil has dropped 12% on concerns slowing Chinese growth will hinder other emerging economies
But the situation could turn worse now given further weakening of the ringgit against the US dollar, says market analysts.
Analysts opine that FGV could end up forking out more to acquire Eagle High stake to the tune of another US$30mil to US$50mil with the weakening ringgit.
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