MARKET DEVELOPMENT
FGV Scouting for Logistics Company to Acquire
FGV Scouting for Logistics Company to Acquire
04/08/2014 (The Star) - FELDA Global Ventures Holdings Bhd (FGV), the world’s largest palm oil producer, is exploring more options to unlock value and monetise its transport and logistics division, say sources.
Since last year, rumour has been rife that FGV was looking to acquire a substantial stake in logistics company Century Logistics Holdings Bhd. The reason for this was because FGV wanted to inject its own transport and logistics division into a listed entity to create more efficiencies and scale.
Sources say the deal has been on the air for more than a year. There is a strong possibility that FGV is also evaluating other logistics companies.
Another listed company that has been bandied about is bonded warehouse operator and logistics provider Integrated Logistics Bhd (ILB). However, this isn’t the only company that FGV is looking at.
ILB, which is set to become a cash company, has jumped 14% over two weeks to close at 94.5 sen on Thursday following this rumour.
Last month, ILB told Bursa Malaysia its indirect 70%-owned subsidiary, Integrated Logistics (HK) Ltd (IL HK) has agreed to dispose of its entire equity interest in ISH Logistics (Shenzhen II) Ltd (IL Shenzhen) and Integrated Logistics Henan (HK) Ltd (IL Henan) to Winfair International Holdings Ltd for 988 million yuan (RM519.3mil).
ILB said it expected a pro-forma gain of RM178mil from the disposals.
Dividend policy
Meanwhile for Century Logistics, sources say that even without the FGV deal, the logistics company has its own plans, chief among them, to adopt a formal dividend policy and to grow through mergers and acquisitions (M&A).
“The company is looking to adopt a dividend policy of between 30% and 40% to reward shareholders That should be happening soon. On the business front, the logistics sector is ripe for consolidation. Being a leader of the supply chain solutions, the time is right, and it is looking to embark on some M&A activity to grow in size,” says the source.
Century Logistics has cash of RM56.47mil as of March 31, 2014.
Earlier this month, Century Logistics announced a proposed bonus issue of up to 61.03 million new shares of RM1 each on the basis of one bonus share for every two existing shares held.
On a year to date basis, Century Logistics is up 15.53% to RM2.38. It touched a 52-week high of RM2.76 on March 13 at the height of the FGV rumours.
For the better part of this year, it was widely reported that the Felda group was in talks to acquire a significant stake in Century Logistics, possibly from its largest shareholder, Datuk Richard Phua, who has a 26.4% stake in the company.
On March 13, Century confirmed that it was exploring a potential corporate exercise with the Felda group, although nothing conclusive was agreed upon.
Over the last few months, FGV group president and chief executive officer Mohd Emir Mavani Abdullah has articulated his plan to list potential companies under its six newly-segmentised clusters on Bursa Malaysia.
The six clusters are oil palm upstream, oil palm downstream, sugar, rubber, research and development, as well as TLMO (transport, logistics, marketing and others).
FGV produces over 3 million tonnes annually, managing 138 Felda-owned estates, 71 palm oil mills, seven refineries, four kernel crushing plants, 13 rubber factories, manufacturing plants and several logistics and bulking installations spread throughout Malaysia and several locations overseas.
It has an elaborate network of lorries and tankers to transport the fresh fruit bunches and CPO to be processed and delivered to bulking terminals. The idea is to create a supply chain for each one of its divisions.
Currently, the logistics business is experiencing some leakages. Having a system in place and implementing cost control procesess at various different checkpoints can immediately yield savings from efficiencies.
“If the logistics arm were to be injected into a public listed company, then the whole process becomes more transparent. This is perhaps where the leakages can be minimised. That was the idea behind looking for a public company,” says an observer.
Emir had indicated recently that the major thrust for FGV to address is the cost structure management within the group such as the mechanism of replanting, labour and logistics right down to the palm oil mills’ efficiency and the oil extraction rate.
Since last year, rumour has been rife that FGV was looking to acquire a substantial stake in logistics company Century Logistics Holdings Bhd. The reason for this was because FGV wanted to inject its own transport and logistics division into a listed entity to create more efficiencies and scale.
Sources say the deal has been on the air for more than a year. There is a strong possibility that FGV is also evaluating other logistics companies.
Another listed company that has been bandied about is bonded warehouse operator and logistics provider Integrated Logistics Bhd (ILB). However, this isn’t the only company that FGV is looking at.
ILB, which is set to become a cash company, has jumped 14% over two weeks to close at 94.5 sen on Thursday following this rumour.
Last month, ILB told Bursa Malaysia its indirect 70%-owned subsidiary, Integrated Logistics (HK) Ltd (IL HK) has agreed to dispose of its entire equity interest in ISH Logistics (Shenzhen II) Ltd (IL Shenzhen) and Integrated Logistics Henan (HK) Ltd (IL Henan) to Winfair International Holdings Ltd for 988 million yuan (RM519.3mil).
ILB said it expected a pro-forma gain of RM178mil from the disposals.
Dividend policy
Meanwhile for Century Logistics, sources say that even without the FGV deal, the logistics company has its own plans, chief among them, to adopt a formal dividend policy and to grow through mergers and acquisitions (M&A).
“The company is looking to adopt a dividend policy of between 30% and 40% to reward shareholders That should be happening soon. On the business front, the logistics sector is ripe for consolidation. Being a leader of the supply chain solutions, the time is right, and it is looking to embark on some M&A activity to grow in size,” says the source.
Century Logistics has cash of RM56.47mil as of March 31, 2014.
Earlier this month, Century Logistics announced a proposed bonus issue of up to 61.03 million new shares of RM1 each on the basis of one bonus share for every two existing shares held.
On a year to date basis, Century Logistics is up 15.53% to RM2.38. It touched a 52-week high of RM2.76 on March 13 at the height of the FGV rumours.
For the better part of this year, it was widely reported that the Felda group was in talks to acquire a significant stake in Century Logistics, possibly from its largest shareholder, Datuk Richard Phua, who has a 26.4% stake in the company.
On March 13, Century confirmed that it was exploring a potential corporate exercise with the Felda group, although nothing conclusive was agreed upon.
Over the last few months, FGV group president and chief executive officer Mohd Emir Mavani Abdullah has articulated his plan to list potential companies under its six newly-segmentised clusters on Bursa Malaysia.
The six clusters are oil palm upstream, oil palm downstream, sugar, rubber, research and development, as well as TLMO (transport, logistics, marketing and others).
FGV produces over 3 million tonnes annually, managing 138 Felda-owned estates, 71 palm oil mills, seven refineries, four kernel crushing plants, 13 rubber factories, manufacturing plants and several logistics and bulking installations spread throughout Malaysia and several locations overseas.
It has an elaborate network of lorries and tankers to transport the fresh fruit bunches and CPO to be processed and delivered to bulking terminals. The idea is to create a supply chain for each one of its divisions.
Currently, the logistics business is experiencing some leakages. Having a system in place and implementing cost control procesess at various different checkpoints can immediately yield savings from efficiencies.
“If the logistics arm were to be injected into a public listed company, then the whole process becomes more transparent. This is perhaps where the leakages can be minimised. That was the idea behind looking for a public company,” says an observer.
Emir had indicated recently that the major thrust for FGV to address is the cost structure management within the group such as the mechanism of replanting, labour and logistics right down to the palm oil mills’ efficiency and the oil extraction rate.