Felda’s proposal to privatise FGV Holdings Bhd is not likely to disrupt the latter’s business transformation plan, according to analysts.
Should Felda feel compelled to downsize FGV operations, the analyst said, there are many loss-making divisions within the group that could be axed instead. “In this manner, it will help to unleash the forces of private sector efficiency, competitiveness, and incentives-compatible market-based systems’” he toldAs part of the group’s transformation plan, it launched an integrated farming blueprint in 2019, which focuses on the development contract farming schemes for cash crops like rice; further expansion of its animal feed business via research & development as well as its venture into dairy farming via the acquisition of Red Agri Sdn Bhd.
“Given the huge gulf between that and Felda’s offer price of RM1.30 per share, these shareholders are reluctant to accept the paper loss. Felda might need to negotiate with the shareholders to achieve the 90%-stake threshold to take the group private, but it is unlikely that it will increase its offer price.”