KUALA LUMPUR: Certain directors of FGV Holdings Bhd have recommended shareholders to reject the takeover bid by Federal Land Development Authority (Felda) on a slew of factors.
This included the low offer price and the fact that the company was strengthening its operations and governance, FGV said in a statement.
The announcement came as Felda continued its buying spree of FGV shares from the open market, mopping up another 9.97 million shares on Thursday for RM12.96 million.
This brings to a total of 103.12 million FGV shares bought by Felda from the open market on six different days this month.
The shares represent 3.0 per cent of FGV's total shares of 3.65 billion.
FGV yesterday said its non-interested directors namely Datuk Yusli Mohamed Yusoff, Datuk Mohd Anwar Yahya, Datin Hoi Lai Ping, Dr. Mohamed Nazeeb P. Alithambi and Dr. Nesadurai Kalanithi had recommended the shareholders to reject Felda's offer.
"Their recommendation is made after careful examination of the terms and conditions of the offer and the rationale for the offer and future plans for FGV Group and its employees as disclosed in the offer document, and taking into consideration the opinions, views and recommendations by (independent adviser) RHB Investment Bank," FGV said in a statement yesterday.
The non-interested directors did not concur with RHB Investment's recommendation to accept the offer, although the price was "not fair but reasonable".
The directors said the offer price was "not fair" as it was below the fair value by RHB Investment, which ranged from RM1.42 to RM1.60 per share, or 8.5 per cent to 18.8 per cent below FGV's fair value.
FGV said the management had since 2019 implemented a transformation programme.
This included its Business Plan 2019-2021, focusing on operational improvements and strengthening the governance and accountability in line with FGV's status as a listed company.
The directors believed that by remaining listed, it would ensure transparency and timely disclosures of FGV, being one of the largest plantation companies in the world in terms of crude palm oil production.
The company produced over three million tonnes of crude palm oil in 2019 (about 15.5 per cent of Malaysia's production and 4.1 per cent of world's production).
Taking into consideration of the significant improvement on the quality of plantation assets of FGV since its listing, the directors were "unable to, with clear conscience recommend the Offer as 'reasonable' to the minority shareholders of FGV, which also include settlers and employees of Felda and FGV respectively."
FGV said the improvements made on the quality of plantation assets included improvements to the average age profile from 16.25 years in 2012 to 13.77 years in 2019 through aggressive replanting efforts.
FGV said it had spent about RM5.3 billion since 2012 to cover replanting costs, improvements on housing for workers and fertiliser costs, as well as increased landbank size since its listing from 382,603 hectares to 439,230 hectares in 2019 (excluding landbank held under joint venture and associates).
FGV said it had not received any alternative proposals.
"Felda and persons acting in concert with it have a collective shareholding of 54.09 per cent (as at January 15, 2021) which provides them control over matters and are able to determine the outcome of resolutions sought at general meetings of FGV," it added.
Based on the notices issued by its adviser Maybank Investment Bank Bhd, Felda had bought FGV shares at RM1.29 and RM1.30 on January 13, 14, 18, 19, 20 and 21.
The biggest block was on January 18 when it bought 41.0 million FGV shares at RM1.30 each.
The purchases added to Felda's earlier acquisitions of FGV shares from two government-linked institutions early last month.
Felda previously announced its acquisition of a total of 506.19 million shares from the Retirement Fund Inc (KWAP) and Urusharta Jamaah Sdn Bhd for RM658 million at RM1.30 each.
On December 8, Felda bought 222.48 million shares from KWAP or a 6.10 per cent stake in FGV for RM289.2 million at RM1.30 per share.
It also acquired 283.71 million shares from Urusharta Jamaah, representing a 7.8 per cent stake in FGV for RM368.8 million at RM1.30 per share.
The various shares acquisitions were part of Felda's restructuring to be more financially independent and sustainable.