09.12.2020 (www.theedgemarkets.com) - KUALA LUMPUR (Dec 9): Shares of FGV Holdings Bhd did not react well upon trading resumption today, after the Felda Land Development Authority (Felda) announced yesterday of its plan to make a mandatory takeover offer (MO) for the group at RM1.30 per share.

FGV dropped five sen or 3.94% to close at RM1.22, after spending the day in the red. The stock was suspended yesterday prior to Felda's announcement.

FGV’s share price had been on a steady climb before the announcement, rising from RM1.03 on Nov 2 to RM1.27 yesterday.

Still, the stock is up close to 10% from six months ago, with upward momentum seen after the economy reopened in June, following the lifting of the movement control order, which eased pressure on palm oil prices. It had earlier sunk 54% in the first quarter of 2020. The offer price marked a premium of 2.36% or three sen from RM1.27, FGV's last traded price prior to the announcement. At today’s closing price, the offer is now at a premium of close to 7% or eight sen.

Felda, via Maybank Investment Bank, announced yesterday that it would be buying over a 6.1% stake held by Kumpulan Wang Persaraan (Diperbadankan) (KWAP) and a 7.78% interest held by Urusharta Jamaah Sdn Bhd for RM658 million cash, which would raise its stake in FGV to 35.12%.

Together with parties acting in concert, Felda would collectively hold more than 50% in FGV, it said, thus triggering the MO.

Maybank IB explained that the proposed share purchase is part of Felda's plan to transform and restructure itself and its related companies to strengthen its core business in the plantation sector.

https://www.theedgemarkets.com/article/fgv-drops-close-4-after-felda-announces-takeover-plan