MIDF recommends investors to accept Felda's RM1.30 privatisation offer
KUALA LUMPUR: MIDF Amanah Investment Bank Bhd has recommended investors to accept Federal Land Development Authority's (Felda) offer to buy all remaining shares in FGV Holdings Bhd (FGV).
In a note today, MIDF said the RM1.30 offer price represents a 12 per cent premium over its fair value estimate of RM1.16.
"Notably, Felda and its persons acting in concert (PACs) collectively hold approximately 86.93 per cent of FGV's total issued shares. The offer, priced at RM1.30 per share - similar to the bid made in 2020 - aims to raise their stake to at least 90 per cent, which would allow Felda to delist FGV,' it said.
MIDF said the stock is currently valued at 16.7 times price-to-earnings ratio (PER) based on the forecast financial year (FY) 2025 earnings per share of 7.6 sen, which is 8.6 per cent below the integrated plantation sector's average PER of 18.3 times.
"If valuation were instead based on FY2024 earnings, the implied PER would be 17.2 times. Although the historical and forward implied PERs are notably below FGV's five-year average of 21.7 times and lag behind sector valuations, we view this as a fair benchmark given the company's mixed outlook,' it said.
MIDF said the rationale for the takeover reaffirms Felda's objective to fully privatise FGV and consolidate its ownership and strategic control over the group.
"Felda has clearly stated that it does not intend to maintain FGV's listing status upon completion of the offer. Should Felda and its PACs reach the 90 per cent ownership threshold, Bursa Malaysia will suspend trading of FGV shares within five market days, after which the delisting process will be initiated as per Bursa's listing requirements.
"If successful, the privatisation is expected to streamline Felda's operational oversight, align FGV's strategic direction with broader national interests, and potentially unlock long-term value through improved efficiency and coordination across the group,' it added. - Bernama Trading ideas: Public Bank, U Mobile, Kerjaya, Samaiden, Titijaya, PeterLabs, Shin Yang, NexG, Globaltec, Maybank, AMMB, PetGas, Hume Cement
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