Felda unit to buy PT Eagle High stake for US$505.4mil


  • Business
  • Saturday, 24 Dec 2016

KUALA LUMPUR: Federal Land Development Authority’s (Felda) subsidiary FIC Properties Sdn Bhd is acquiring the 37% stake in PT Eagle High Plantations Tbk that was previously eyed by sister company Felda Global Ventures Holdings Bhd (FGV) but at a 26% discount to the original price tag.

Shares in PT Eagle shot up 8.8% on Friday to an eight-month high of 298 rupiah, which values the Indonesian planter at around US$700mil (RM3.13bil).

Felda said in a statement yesterday that it was buying the stake in the firm for US$505.4mil (RM2.26bil) – much lower than the US$680mil (RM3.04bil) in cash and FGV shares to be paid under a heads of agreement inked between FGV and vendor Rajawali Group in June last year.

Analysts and investors were quick to show their disapproval after the FGV-Rajawali deal was first announced, sending FGV shares to a record low. The Eagle High stake was being bought at more than a 70% premium to the shares’ previous closing price.

FGV subsequently said it would negotiate further the final acquisition price. It was more recently reported that FGV had shelved the plan to acquire Eagle High.

Felda said FIC Properties had signed a sale and purchase agreement (SPA) with Rajawali Group to acquire the 37% stake in Eagle High, one of Indonesia’s largest palm oil companies.

“The US$505.4mil acquisition will mean that Felda will among others have access to more than 320,000ha land bank in Indonesia (about 4.4 times the size of Singapore), including more than 125,000ha of planted nucleus,” it said.

Felda said it could not provide further details on the acquisition at present as the SPA was subject to approval of the relevant authorities, both in Malaysia and Indonesia.

It said the decision to acquire the stake was in line with its long-term goal to become among the world’s largest palm oil groups.

“We have to continue to show growth as staying stagnant will mean that Felda will be left behind as our competitors are expanding fast in this growing industry.

“To get this growth, Felda needs to venture into new frontiers as additional plantation land in Malaysia is becoming scarce,” it added.

Besides gaining access to more land bank, Felda said, the acquisition would also help it and its associate companies to make further inroads into the lucrative and expanding domestic market in Indonesia.

“We believe that the acquisition will bring positive development for the industry and the country.”

Meanwhile, in a filing with Bursa Malaysia, FGV said it had signed an agreement with the Rajawali group yesterday to terminate all transaction documents pertaining to the proposed purchase of a 37% equity interest in Eagle High and proposed purchases of stakes in Rajawali’s sugar cane plantation companies.

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