KUALA LUMPUR (Dec 23): Analysts are largely of the view that the Federal Land Development Authority's (Felda) RM1.30 offer price for shares in FGV Holdings Bhd is fair, given how the planter's shares have performed over the past year.
CGS-CIMB regional head of agribusiness and head of research Ivy Ng said the offer price should not be compared against FGV's initial public offering (IPO) price of RM4.55, as the planter had a different structure, and that market conditions were different then.
"I think minority [shareholders] should consider accepting the offer and reinvest in companies with higher potential return, as FGV's upside may be capped by the offer price of RM1.30," Ng told theedgemarkets.com.
Ng also noted there is still uncertainty surrounding FGV, particularly its land lease agreement (LLA) with Felda, where issues could arise over its termination and compensation terms. The LLA involves Felda-owned estates totalling 350,733ha, which were leased to FGV for 99 years from Nov 1, 2011.
Recall the Cabinet had previously given the green light for Felda to terminate the LLA with FGV, with Felda also wanting to take over the latter's oil palm mills. FGV is supposed to get compensation from the termination, although the group previously maintained that it still had not received any notice of the termination from Felda.
Meanwhile, Ng pointed out that major shareholders Retirement Fund Inc (KWAP) and Urusharta Jamaah Sdn Bhd — who each sold a 6.1% stake and a 7.78% stake respectively to Felda — would have done a great deal of analysis before parting with their stakes in FGV for RM1.30 apiece as well.
Similarly, an analyst who covers the plantation sector but declined to be named said minority shareholders should look at exiting the planter now with Felda's offer, as there is still a great deal of uncertainty when it comes to the LLA and the group as a whole.
"Of course if you bought [FGV] at RM4.55 [a share], this offer would be below your investment cost, however, if you bought at when FGV was trading at, say 80 sen to RM1 a piece, there is a definite upside when it comes to the offer price," the analyst said.
Felda's RM1.30 offer for each FGV share is a steep 71.43% discount to the planter's IPO price of RM4.55. When contrasted against its one-year low of 72 sen on March 19, however, the offer is at an 80.56% premium.
FGV topped Bursa Malaysia's most active list and rose among leading gainers in morning trade today after the plantation group said yesterday it had received an unconditional mandatory takeover offer notice at RM1.30 a share from Felda, which intends to delist FGV from the local bourse.
Felda's takeover offer for FGV became unconditional after the collective FGV shareholding of Felda and persons acting in concert with it rose past 50%. FGV's delisting will happen if Felda and its associates are able to acquire in aggregate 90% or more of FGV's shares in the takeover.
The announcement came after Felda completed the proposed share acquisition announced on Dec 8. Its shareholding in FGV had increased to 50.49% from 36.61% previously. Hence, the conditional mandatory takeover offer, which was also unveiled on Dec 8, is now an unconditional offer.
At the offer price of RM1.30 a share, FGV is valued at some RM4.75 billion based on its issued share capital of about 3.65 billion.
As at 3.50pm, FGV was trading just two sen below the offer price, at RM1.28 — up 10 sen from the previous day's closing — with 188.38 million shares traded, giving it a market capitalisation of RM4.67 billion.
FGV shares were floated in 2012 at RM4.55 apiece. Felda received RM5.99 billion from the sale of its shares while FGV raised RM4.9 billion in fresh capital from the listing of new shares. At the time, the IPO was the second biggest globally after Facebook Inc.
At its all-time high in 2012, FGV was valued at about RM17 billion.