KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) is targeting to complete the due diligence on its proposed acquisition of a 37% stake in major Indonesian palm oil player PT Eagle High Plantations Tbk by the end of this month, according to FGV chief executive officer (CEO) Datuk Mohd Emir Mavani Abdullah.

Some 75% of the due diligence process has been completed, he told reporters yesterday after delivering a report on the company’s visit to Eagle High’s plantations in Indonesia to representatives of FGV settlers.

“Once we have completed [the due diligence process], we will have an internal discussion and then, we will inform Bursa [Malaysia] and so on,” he said.

FGV announced in June that it had entered into a heads of agreement with Rajawali Group to acquire the latter’s equity interest in Eagle High. It was reported that Eagle High had more than 400,000ha of planted and unplanted land in Kalimantan, Sumatra and in the Papua province in Indonesia.

The proposed deal will see FGV pay RM2.37 billion in cash and issue 95 million new shares to fund the acquisition. FGV also proposed to acquire a 95% stake in Rajawali’s sugar project for RM249 million.

The deals were subject to the completion of a due diligence by FGV Kalimantan, expected to be completed before July 31.

Mohd Emir said FGV’s trip to visit Eagle High’s plantations with Felda settlers had set back the initial target.

“That (trip) was initially not part of the plan, but we wanted to let the settlers see the plantations in Indonesia for themselves so they can see what the deal entails,” he said.

Meanwhile, Mohd Emir was coy when asked if his contract has been renewed for another year.

“Well, you see my presence here, so you know I am there, [and] that is good enough,” he said.

Deputy Minister in the Prime Minister’s Department Datuk Razali Ibrahim, who was also present, said Mohd Emir is expected to continue in his role until further notice.

There was speculation that someone new would replace Mohd Emir following the company’s financial performance and purportedly expensive deals recently. Lembaga Tabung Haji managing director and CEO Tan Sri Ismee Ismail was also rumoured to be Mohd Emir’s replacement.

But a local daily reported last month that Mohd Emir’s two-year contract, which ended on July 15, was likely to be renewed for another year.

Tabung Haji is the second largest shareholder of FGV with a 7.78% stake, following the Federal Land Development Authority’s 34% stake in FGV.

Separately, Mohd Emir said FGV’s efforts to lead the development of a special economic zone for palm oil downstream processing in Indonesia will be positive for the group.

“They have an abundance of raw materials, especially palm kernel oil, and the source of raw materials is cheaper over there,” he said.

“So they (the Indonesians) see an advantage to grow their downstream business further and FGV has the experience in this area. Our global partners and presence will provide an advantage to them to accelerate this strategy in Indonesia,” he added.

Bernama, quoting Razali, reported last Friday that Malaysia, through FGV, would contribute research and development expertise to Indonesia and form a joint venture with Indonesia’s Rajawali Group to set up the special zone. The project is expected to materialise by end-2016.

FGV shares closed unchanged at RM1.68, with a market capitalisation of RM6.13 billion. The stock, which debuted in June 2012, has since slumped about 63% from its initial public offering price of RM4.55.

This article first appeared in digitaledge Daily, on August 5, 2015.