FGV eyes EHP acquisition in bid to further palm oil interests

FGV said the partnership EHP with would also provide access to Asean’s largest single market, allowing FGV to gain a foothold in a key palm oil supply market. — Reuters pic
FGV said the partnership EHP with would also provide access to Asean’s largest single market, allowing FGV to gain a foothold in a key palm oil supply market. — Reuters pic

KUALA LUMPUR, June 19 — Felda Global Ventures Holdings Bhd (FGV) today clarified that its proposed investment in PT Eagle High Plantations (EHP) is in line with its plan to become a world leading integrated palm oil plantation company.

“The proposed investment would increase landbank, improve age profile of crops, cost optimisation and provide strategic long-term partnership, with a conglomerate in Indonesia,” FGV said in a statement today. 

FGV refers to article “EPF hopes FGV will address valuation concern on PT Eagle High” as reported by Bernama on Wednesday, questioning the rationale for the US$680 million, or RM2.55 billion, proposed acquisition of EHP from Rajawali Group which has been regarded as too expensive by analysts. 

The partnership, FGV said, would also provide access to Asean’s largest single market, allowing FGV to gain a foothold in a key palm oil supply market. 

FGV said it was important to note that the proposal implied equity value /hectare (ha) for the planted hectarage of Rajawali at approximately US$17,400, which was lower than the recent reported transactions involving Sime Darby Bhd’s acquisition of New Britain Palm Oil Ltd (US$25,900) and IOI Corp Bhd’s takeover of Unico-Desa Plantations (US$23,500). 

In comparing with recent Indonesian transactions, hectarages involved were small in nature, of less than 70,000 ha, said FGV.

From a corporate perspective, FGV said, this deal presented it with a great opportunity as part of its expansion plan.

EHP owns 425,000 ha, with 67 per cent in Kalimantan.—Bernama

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