KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) has signed a Heads of Agreement with Rajawali Group to acquire a 37 per cent stake in PT Eagle High Plantations (EHP) for US$680 million (US$1=RM3.69) in cash and stocks.
Under the proposed acquisition, FGV will pay US$632 million in cash for 30 per cent stake and 95 million new FGV shares for the remaining seven per cent stake.
This would result in Rajawali Group owning 2.6 per cent of the enlarged FGV share base, FGV said in a statement today.
In addition, FGV will also acquire between a 93 per cent and 95 per cent stake in Rajawali Group’s sugar project for US$67 million.
The stakes in EHP and Rajawali Group’s sugar project will be owned by FGV Kalimantan Sdn Bhd, a unit of FGV.
Upon completion of the deal, FGV will become a partner of Rajawali Group, a highly respected local conglomerate, which will remain the controlling shareholder in EHP, the third largest oil palm company in Indonesia.
The deal was expected to be funded by a combination of internal resources and external financing.
More details would be finalised when the definitive agreements were signed, FGV said.
“It is important to note that this acquisition will in no way affect FGV’s dividend policy.
“The company is firmly committed to delivering on its promises to shareholders,” said FGV Group President and Chief Executive Officer Datuk Mohd Emir Mavani Abdullah.
He said FGV’s technology, downstream expertise and global footprint would bring significant value to Rajawali as the latter seeks to extract operational efficiencies and streamline costs through this transaction.
Currently, EHP owns 425,000 hectares of oil palm plantations, out of which 67 per cent are in Kalimantan and the rest spread over Papua New Guinea (nine per cent), Sulawesi (19 per cent) and Sumatra (five per cent).
Rajawali is a strong partner in Indonesia and the transaction provides access to a formidable platform in Southeast Asia’s largest market, with significant revenue and cross-selling opportunities through its extensive network and credentials.
In a filing to Bursa Malaysia, FGV’s shares will resume trading on Monday after being suspended on Thursday and Friday at RM1.86.
Accordingly, trading in the structured warrants relating to FGV will also resume at the same time.