FGV to dispose of its unit in China for RM100m

-A +A

KUALA LUMPUR (July 11): FGV Holdings Bhd inked an equity transfer agreement with Grand Industrial Holdings Co Ltd (GIH) to divest its 100% equity interest in FGV China Oils Ltd (FGVCO) for RMB165 million (RM100 million) in cash.

In a filing with Bursa Malaysia, FGV said the disposal is in line with its three-year transformation plan to rationalise and divest its non-performing businesses and to focus on maximizing returns from performing businesses.

The proceeds from the proposed disposal will be used for working capital requirements. The proposed disposal is not expected to have any significant impact on the earnings and earnings per share of the FGV Group.

FGVCO is located in Dongguan, China, and is principally involved in the processing, refining, storage and marketing of edible oils for the China market.

FGVCO has been incurring losses since it was acquired in 2015 due to market disparity arising from competition coming from regional suppliers. FGV said the disposal will not have any material impact on FGV’s current China business or its strategic plans for the China market.

“Barring any unforeseen circumstances and subject to all the approvals and/or consents being obtained, the proposed disposal is expected to be completed between the end of 2019 and first quarter 2020,” it added.

FGV shares price closed unchanged at RM1.12 with some 3.81 million shares changing hands, giving it a market capitalisation of RM4.09 billion. Year-to-date, the counter has gained 55.56% from 72 sen.