FGV to dispose of its unit in China for RM100m

This article first appeared in The Edge Financial Daily, on July 12, 2019.
-A +A

KUALA LUMPUR: FGV Holdings Bhd inked an equity transfer agreement with Grand Industrial Holdings Co Ltd to divest its 100% equity interest in FGV China Oils Ltd (FGVCO) for 165 million yuan (RM100 million) in cash.

In a filing with Bursa Malaysia yesterday, 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 maximising 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 [the] first quarter [of] 2020,” it added. FGV shares price closed unchanged at RM1.12 yesterday with some 3.81 million shares changing hands, with a market capitalisation of RM4.09 billion. Year to date, the counter has gained 55.56%.