CGS-CIMB in favour of accepting Felda’s takeover offer for FGV shares
KUALA LUMPUR: CGS-CIMB is in favour of FGV Holdings Bhd’s shareholders accepting the takeover offer by the Federal Land Development Authority (Felda).
It said in the past, the share price of the plantation company was boosted by media reports of a potential takeover offer by Tan Sri Syed Mokhtar Albukhary, which led to the expectation that the stock could re-rate closer to its fair value back then. “However, following recent developments and Felda’s more than 50 per cent control over FGV, a competing offer for FGV is unlikely.
“FGV’s free float will also fall post the takeover offer. As such, we favour accepting the offer given the limited upside at the current price level and risks considered,” it said in a research note yesterday.
On Jan 22, independent adviser
RHB Investment Bank said the offer of RM1.30 per share was “not fair but reasonable” but recommended that FGV shareholders accept the offer.
However, FGV’s non-interested directors advised shareholders to reject the offer. They pointed out, among others, that the offer price was below the initial public offering (IPO) price of RM4.55 per share and the quality of FGV’s plantation assets had improved significantly since the IPO.
They also said keeping it as a public listed company would ensure the transparency and timely disclosures of FGV, being one of the world’s largest plantation companies in terms of crude palm oil production.
Felda does not intend to maintain the listing status of FGV on Bursa Malaysia’s Main Market.
In its note yesterday, CGSCIMB said the conflicting advice provided could be the result of different expectations on FGV’s share price performance after the offer period ends.
The brokerage firm said FGV’s independent directors may believe the share price would rise with better crude palm oil (CPO) prices and improved estates’ age profiles.