KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) is acquiring a piece of oil palm plantation land in Beluran, Sabah, together with four subsidiaries from Golden Land Bhd, for RM655 million, to expand the company’s land bank in Malaysia and Indonesia.

In a Bursa Malaysia announcement yesterday, FGV (fundamental: 1.15; valuation: 1.4) said its wholly-owned unit Pontian United Plantations Bhd entered into a conditional sale and purchase agreement with Golden Land to effect the acquisitions. The four subsidiaries that Pontian are buying from Golden Land are Yapidmas Plantation Sdn Bhd, Sri Kehuma Sdn Bhd, Tanah Emas Oil Palm Processing Sdn Bhd and Ladang Kluang Sdn Bhd. The four have net assets worth RM468.65 million and are mainly in the business of oil palm cultivation, as well as mailing and the sale of oil palm products in Malaysia.

The Sabah land, meanwhile, measures approximately 836.10ha.Of the purchase consideration, RM583.28 million is paid for the four companies, while RM71.72 million was for the land.

FGV also said the acquisitions represent a strategic investment by the group and is expected to enhance the future earnings and shareholders value of FGV.  It added that the acquisitions will be partly financed by cash and borrowings.Separately, Golden Land (fundamental: 0.7; valuation: 2.0) said the original cost of investments for the subsidiaries were RM98 million and RM27.78 million for the land; the collective disposals will result in a gain of RM15.23 million for the group, after taking into account the real property gains tax of RM25.96 million and estimated expenses for the proposed disposal of RM20 million.

“The board has yet to determine the utilisation of net proceeds but shall consider, among others, further investment to develop its Indonesian plantations and property development business as well as a cash distribution to shareholders of the company,” said Golden Land.

FGV closed one sen or 0.52% lower at RM1.91, giving it a market value of RM6.97 billion. The trading of Golden Land’s shares, meanwhile, was suspended yesterday. It will resume trading today.

This article first appeared in The Edge Financial Daily, on June 9, 2015.