KUALA LUMPUR: FGV Holdings Bhd’s five non-interested directors say the Federal Land Development Authority’s (Felda) offer of RM1.30 a share as not fair and advised minority shareholders to reject the offer.
In their recommendation on Friday, they said they have “not concurred” with RHB Investment Bank’s independent advice to accept the offer.
The non-interested directors are Datuk Yusli Mohamed Yusoff; Datuk Mohd Anwar Yahya; Datin Hoi Lai Ping; Dr Mohamed Nazeeb, P. Alithambi and Dr Nesadurai Kalanithi.
However, RHB Investment Bank said the offer is “not fair but reasonable”. It said the offer was not fair as the offer price of RM1.30 per offer share is lower and represents a discount of between 12 sen (8.5%) and 30 sen (18.8%) over the range of estimated value per FGV share derived using the sum-of-parts valuation method of between RM1.42 and RM1.60.
In assessing the reasonableness of the offer, RHB Investment Bank considered that the board has not received any alternative proposal for the offer shares (including any offer to acquire the assets and liabilities of FGV Group).
It also said In view of the collective shareholding of the offeror and the persons acting in concert in FGV of 54.09%, any alternative proposal will not be successful unless with their support
Based on the above, RHB Investment Bank’s view was that the offer is reasonable.
However, the non-interested directors of FGV argued that firstly, the offer price is not fair, as it is below the fair value by the independent adviser ranging from RM1.42 to RM1.60 per FGV share, or 8.5% to 18.8% below the fair value per FGV share.
Secondly, the management of FGV had since 2019 implemented a transformation programme (that is the Business Plan 2019-2021) focusing on operational improvements and strengthening the governance and accountability in line with FGV's status as a public listed company.
Thirdly; keeping FGV as a public listed company will ensure the transparency and timely disclosures of FGV, being one of the largest plantation companies in the world in terms of crude palm oil (CPO) production with over three million tonnes produced in 2019 (approximately 15.5% of Malaysia’s production and 4.1% of world’s production), and a company of significant public interest and impact on corporate world of Malaysia; and
Fourthly, at the IPO price of RM4.55 per FGV share and now being offered to be acquired at RM1.30 per FGV Share, and taking into consideration of the significant improvement on the quality of plantation assets of FGV since IPO, the “non-interested directors are unable to, with clear conscience recommend the Offer as Reasonable to the minority shareholders of FGV, which also include settlers and employees of Felda and FGV respectively”.
They also said the improvements made on the quality of plantation assets include amongst others, improvements to the average age profile from 16.25 years in 2012 to 13.77 years in 2019 through aggressive replanting efforts, incurring approximately RM5.3bil since 2012 to cover replanting costs, improvements on housing for workers, and fertiliser costs, as well as increased landbank size since IPO from 382,603 hectares to 439,230 hectares in 2019 (excluding landbank held under joint venture and associates).
“Accordingly, the non-interested directors recommend that you reject the offer, ” they said.
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