PETALING JAYA: Minority shareholders of FGV Holdings Bhd are advised to accept the acquisition offer by the Federal Land Development Authority (Felda), says TA Securities Research.
The research unit in its latest report said investors could switch to other undervalued plantation stock with more compelling stories and higher earnings growth such as TSH Resources Bhd and IJM Plantations Bhd.
“To gauge whether the acceptance level can exceed the 90% threshold for compulsory acquisition, investors should start monitoring the daily transaction volume before the offer lapse on Feb 16, ” added TA Securities.
According to Bursa announcements, the public shareholding spread of FGV has dropped to 23.93% of its issued share capital, which is below the minimum required level of 25% under the listing requirements.
The shortfall in the public shareholding spread was a direct consequence pursuant to the unconditional mandatory takeover offer by Felda. The closing date for shareholders to accept the offer has been extended to Feb 16 from Feb 2.
Felda has been buying FGV’s shares in the open market since announcing the unconditional mandatory takeover offer on Jan 12.
As of Feb 5, Felda holds about 68.3% shares in FGV.
Felda has also acquired a 6.1% stake held by Kumpulan Wang Persaraan (KWAP) and a 7.78% interest held by Urusharta Jamaah Sdn Bhd at RM658mil.
TA Securities pointed out that “If Felda received 90% or more of FGV shares (excluding treasury shares), Bursa Securities will suspend the trading in FGV shares immediately upon expiry of five market days from the closing date of the offer.
“Subsequently, Felda will submit a request to FGV to take the necessary procedures to withdraw its listing status.”
Otherwise, a special resolution may need to be carried out in an EGM if Felda failed to meet the 90% threshold for acceptance but hold more than 75% of independent shares, said the research unit.Felda had said that the proposed acquisition of FGV is part of its transformation plan and will enhance the agency’s ability to control the plantation land and integrated value-chain of FGV and its subsidiaries.
This will also provide Felda access to downstream activities undertaken by FGV in the plantation sector.