FGV directors differ from advisor on Felda’s ‘below fair value’ offer

By SHAHEERA AZNAM SHAH / Pic BLOOMBERG

FIVE of FGV Holdings Bhd’s non-interested directors have advised shareholders to reject Federal Land Development Authority’s (Felda) RM1.30 a share cash offer as the offer price undervalues the planter.

The position of the directors was opposed to independent advisor RHB Investment Bank Bhd (RHB IB), which in its report advised shareholders to accept the offer as it was reasonable, but not fair.

The position raises the chance of Felda needing to increase its offer price for FGV, which was last traded at RM1.30.

FGV, in a statement last Friday, noted that the non-interested directors believed the recommendation offer price of RM1.30 per share is below fair value.

“The non-interested directors of FGV have not concurred with the recommendation to accept the offer as the offer price is ‘not fair’.

“It is below the fair value by RHB IB ranging from RM1.42 to RM1.60 per FGV share or 8.5% to 18.8% below the fair value per FGV share,” it said. The FGV directors — namely Datuk Yusli Mohamed Yusoff, Datuk Mohd Anwar Yahya, Datin Hoi Lai Ping, Dr Mohamed Nazeeb P Alithambi and Dr Nesadurai Kalanithi — have made their recommendation based on the rationale and future plans of the company.

“Their recommendation is made after careful examination of the terms and conditions of the offer and the rationale for the offer and future plans for FGV group and its employees as disclosed in the offer document, and taking into consideration the opinions, views and recommendations by RHB IB as set out in the Independent Advice Circular,” it said.

The directors were also of the opinion keeping FGV as a public-listed company will benefit shareholders.

“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 metric tonnes produced in 2019, 15.5% of Malaysia’s production and 4.1% of world’s production.

“The company also has a significant public interest and impact on the corporate world of Malaysia,” the FGV statement last Friday noted.

FGV added that the directors viewed there are discrepancies in the share price between the IPO and offer price, given the improvement of Felda’s oil palm plantations under FGV’s management.

“At the IPO price of RM4.55 per share and now being offered to be acquired at RM1.30 and taking into consideration of the significant improvement on the quality of plantation assets of FGV since the IPO, the non-interested directors are unable to, with a clear conscience, recommend the offer as ‘reasonable’ to the minority shareholders of FGV, which also include settlers and employees of Felda and FGV,” it said.

FGV added that the improvements made on the quality of plantation assets include improvements to the average age profile from 16.25 years in 2012 to 13.77 years in 2019 through aggressive replanting efforts, incurring RM5.3 billion since 2012 to cover replanting costs, improvements on housing for workers, fertiliser costs and increased landbank size since IP