Business

Felda to buy stake in Indonesian oil palm company

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Syndicated News
Written by Syndicated News

KUALA LUMPUR — December 23, 2016: The Federal Land Development Authority (Felda) through its subsidiary FIC Properties Sdn. Bhd. is buying 37 per cent of an Indonesian oil palm company for US$505.4 million (RM2.26 billion).

The acquisition of the Jakarta-listed PT Eagle High Plantations Tbk (EHP) allows Felda to have access to more than 320,000 hectares of land bank in Indonesia which is about 4.4 times the size of Singapore, including more than 125,000 ha of planted nucleus.

In a statement today, Felda said it had signed a sale and purchase agreement (SPA) with Rajawali Group to acquire the stake.

Further details on the acquisition in one of Indonesia’s largest palm oil companies could not be provided at this moment as the SPA was subject to approval by the relevant authorities, both in Malaysia and Indonesia.

It explained that the decision to acquire the stake is in line with its long-term goal to become among the world’s largest palm oil groups.

“We have to continue to show growth as staying stagnant will mean that Felda will be left behind as our competitors are expanding fast in this growing industry. To get this growth, Felda needs to venture into new frontiers as
additional plantation land in Malaysia is becoming scarce,” said the statement.

Apart from gaining access to more land bank, the acquisition will also help Felda and its associate companies to make further inroads into the lucrative and expanding domestic market in Indonesia.

Rajawali deputy managing director, Satrio Tjai, described the SPA as a significant milestone in the lengthy negotiation process.

In a filing to Bursa Malaysia, Felda Global Ventures Holdings (FGV), which was earlier engaged in moves to buy the 37 per cent stake, said the company and vendors had mutually agreed to terminate all negotiations.

Last year, FGV signed a heads of agreement with Rajawali to acquire the stake for US$680 million in cash and stocks.

FGV shares fell nine sen to close at RM1.53 today. — Bernama
 

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