KUALA LUMPUR (June 11): FGV Holdings Bhd's (KL:FGV) plan to gain full control of eight subsidiaries from Koperasi Permodalan Felda Malaysia Bhd (KPF) in a RM229.8 million deal has been deemed by an independent adviser as "fair and reasonable", and not detrimental to non-interested shareholders.

In a circular filed with Bursa Malaysia, Quantephi Sdn Bhd, the independent adviser, noted that the total purchase price exceeds the target assets' combined proportionate adjusted net asset value of RM209.3 million — mainly due to a 25% premium for FGV Agri Services Sdn Bhd (FGVAS), and the inclusion of FGV Rubber Industries Sdn Bhd (FGVRI), which has a negative net asset value of about RM8 million.

The adviser said the premium for FGVAS is justified as the unit — one of Malaysia's largest producers of oil palm seeds, holding an estimated 40% domestic market share — has delivered consistent profits, with an average profit after tax margin of 15.6% and an average dividend yield of 7.7%.

"We are of the view that the 25% premium attributed to FGVAS is reasonable,” Quantephi said.

The adviser also said FGV’s implied overall purchase price earnings ratio (PER) of 7.68 times compares favourably with the PER range of comparable listed companies, which falls between 4.50 times and 12.12 times. This comparison suggests the fairness of the deal.

The group’s profit after tax and minority interests is projected to increase modestly by about RM3.5 million post-transaction. As no new shares will be issued, FGV’s earnings per share is expected to inch up slightly from 7.6 sen to 7.7 sen for the financial year ending Dec 31, 2025, it noted.

"In our opinion, the proposed acquisitions are expected to deliver operational and strategic benefits to the group. With full ownership of the target companies, FGV will be better positioned to streamline functions, enhance coordination and optimise performance across its core and support operations,” the adviser said. “These improvements are expected to contribute positively to the group’s long-term growth and execution of its strategic initiatives.”

The deals, announced last month, involve FGV, through its 72%-owned unit FGV Palm Industries Sdn Bhd (FGVPI), acquiring the remaining stakes in several companies from KPF: 16.67% stake in FGV Kernel Products Sdn Bhd for RM12.94 million; 33.33% stake in FGV Refineries Sdn Bhd for RM17.89 million; and 49% stake in FGV Marketing Services Sdn Bhd for RM23.86 million.

Separately, through its wholly owned Felda Holdings Bhd (FHB), FGV will acquire from KPF the remaining stakes in five other companies: 23.08% stake in FGVAS for RM62.44 million; 49% stake in FGV Transport Services Sdn Bhd for RM77.9 million; 49% stake in FGV Security Services Sdn Bhd for RM17.23 million; 20% stake in FGV Prodata Systems Sdn Bhd for RM17.48 million; and 28.57% stake in FGVRI for RM1.

These acquisitions come as FGV's cash pile has grown, following a jump in profits in 2024. FGV's cash and cash equivalents increased by 14% to RM1.73 billion last year.

As of Wednesday’s noon break, FGV’s share price rose one sen or 0.77% to RM1.31, giving the company a market capitalisation of RM4.74 billion.