Highlight: Chen to accept FGV offer

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KUALA LUMPUR: Dr Chen Man Hin, who is chairman of Pontian United Plantations Bhd and one of its major shareholders, said he will be accepting the takeover offer from Felda Global Ventures Holdings Bhd (FGV) for shares in the unlisted plantation outfit at RM140 cash each.

In a gathering with Pontian shareholders in Seremban on Sunday, Chen, with direct and indirect stakes of 7.59% in the company as at Dec 31, 2012, announced that he will be selling his shares to FGV. Based on FGV’s offer that values the whole of Pontian at RM1.2 billion, Chen’s stake is worth slightly over RM91 million.  

According to shareholders who attended the meeting, Chen advised shareholders to carefully consider the offer from FGV but as for himself, he will be moving on after 38 years with Pontian.

When contacted by The Edge Financial Daily, DAP’s founding chairman, who is now 88 years old, would only say: “It is a good opportunity for shareholders to unlock value in the company (Pontian).”

With Chen selling his shares, FGV would have garnered at least a 31.4% stake in Pontian thus far. Earlier, FGV had obtained an irrevocable undertaking from TSH Resources Bhd together with the Lee family from Seremban to sell their collective 23.81% stake in Pontian for RM288.4 million cash. The members of the Lee family include Jim Lee Min Huat, who is an executive director of Scope Industries Bhd.

Although Chen, TSH and Lee have agreed to its offer, FGV still needs to garner another 18.7% stake to cross the 50% threshold that will make its takeover offer unconditional.

On July 18, FGV launched a takeover of Pontian, offering RM140 a share which values the entire company at RM1.2 billion. Its offer price is 56% higher than the RM90 per share offered by TSH and the Lee family in June last year, which was to be paid in cash and TSH shares.

Due to pricing issues, TSH and the Lee family did not succeed in taking over Pontian. However, TSH still managed to raise its stake in Pontian via Bisa Jaya Sdn Bhd to 16.17% from 7.96% after buying some of the shares held by minority shareholders.

Pontian, which is headquartered in Seremban, owns and operates 16,194ha of oil palm estates in Johor and Sabah. Most of the land is located in Sabah where it also has a palm oil mill. The average age profile of its oil palms is said to be approximately 13 years.

According to the offer document issued by FGV on Aug 2, Pontian registered RM39.5 million in net profit attributable to shareholders for its financial year ended Dec 31, 2012 (FY12). This translates into earnings per share of RM4.57.

It paid a gross dividend per share of RM1.60 for FY12.

Pontian had RM256 million in cash and cash equivalents as at Dec 31, 2012, while its net asset value per share stood at RM47.87.

According to analysts, FGV’s offer price represents around 30.7 times Pontian’s FY12 earnings and 2.9 times book value.

Based on the valuation of RM1.2 billion, the offer values Pontian’s land at about RM74,100 per ha. Less the cash of RM256 million, the landbank is valued at RM58,300 per ha.

Analysts said Pontian’s land is located close to FGV’s existing plantations in Lahad Datu, Sabah, which could create synergies and cost savings for the agribusiness giant.

This article first appeared in The Edge Financial Daily, on August 07, 2013.