The divergent views of the independent directors and that of the independent advisers clearly put the balance minority shareholders in a situation of uncertainty on whether to accept the offer. IN a rare instance of a corporate takeover, the independent directors of a listed company have expressed different assessments of the deal as compared to what the independent advisers have said. This has come about after FGV Holdings Bhd’s five non-interested directors objected to Federal Land Development Authority’s (Felda) takeover price of the former. On Dec 22, Felda triggered a mandatory takeover offer (MGO) of FGV shares after it acquired 506.19 million FGV shares or a 13.88% stake from state-linked companies, Urusharta Jamaah Sdn Bhd and Retirement Fund (Inc) for RM658mil cash. The MGO was triggered at RM1.30 a share. Subsequently, Felda acquired more shares from the market and from the acceptances of its MGO, giving it and the persons acting in concert with it a total holding of 54.09% of FGV. The divergent views of the independent directors and that of the independent advisers clearly put the balance minority shareholders in a situation of uncertainty on whether to accept the offer. In the end, shareholders also ought to consider what RHB, the independent adviser, says – that the decision to accept or reject the offer would hinge on the individual risk appetite and specific investment requirements of FGV shareholders. “The holders are advised to closely monitor the share price, trading volume and any press releases and announcements made in relation to the offer before making a decision on the course of action to be taken in respect of the offer shares, ” it advises. Previously, a number of research analysts had expressed a view that the takeover price of RM1.30 was fair because it provided an avenue for FGV shareholders to exit their position. CGS-CIMB Research head Ivy Ng noted that “this is probably a better option for FGV shareholders than having FGV’s share price being negatively impacted by concerns over the termination of the land lease agreement of dispute over compensation terms.” A contrarian view is expressed by a former high ranking official of Felda. He reckons that shareholders should reject Felda’s offer at RM1.30 and keep the shares even if FGV is no longer listed on the stock exchange. He says that in line with FGV’s transformation plan, there are better expected earnings in the future on the back of improvements on the quality of its plantation assets. This involves improving the average age profile via aggressive replanting efforts and better housing for workers. “There would be good dividends proposed for the shareholders as Felda will pay out maximum dividends to pay off its loans and, in return, the shareholders would benefit, ” he noted. Over time, he believes Felda would buy its FGV shares out at a better price. For now, the cash offer of RM1.30 per share would be opened for acceptances until 5pm on Feb 2. Felda has issued an offer document with regards to the MGO for all remaining shares in FGV it does not own. Any extension or revision of an announcement would be made by Maybank Investment Bank Bhd, the principle adviser to Felda for the offer document. In Felda’s announcement, it noted that the offer would provide an opportunity for the group to further increase its shareholding in FGV and consolidate its control in the planter. “In turn, this would place Felda in a better position to align the future strategy and business direction of FGV, primarily its plantation sector, to fully realise the benefits anticipated from the exercise, ” it said. After the completion of the offer, Felda said it intended to continue the existing businesses of FGV in oil palm plantation and related downstream activities, including sugar refining, manufacturing and logistics. It also ensured that it does not plan to liquidate any company within the FGV group. One thing that remains clear is that Felda is still determined to take FGV private.
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