Malaysia's state-owned Federal Land Development Authority (Felda) said it agreed on a deal that will see it increase its stake in palm giant FGV Holdings, with the view to taking full control of the world's largest crude palm oil producer.
Maybank Investment Bank, in a statement on behalf of Felda, said the company will acquire a 13.88 per cent equity interest held by two state-linked agencies - pension fund Retirement Fund Incorporated (KWAP) and investment holding company Urusharta Jamaah- for a total of RM658 million (S$216 million) in cash.
Felda also proposed a mandatory takeover offer for the remaining FGV shares not already owned by Felda after completion of the equity deal.
Felda is the largest shareholder of FGV Holdings, but FGV has so far remained independent in its governance.Bottom of Form
The acquisition will allow Felda to "obtain statutory control of FGV", and strengthen Felda's ability to control FGV's plantations, its downstream operations and its subsidiaries, the statement said.
"The proposed acquisition is expected to contribute positively to the future earnings of Felda," it said.
A government inquiry in response to graft allegations last year found that poor management had sent the Felda's losses and debt soaring over the past decade.
The government in October approved Felda to issue a RM9.9 billion sukuk with a government guarantee to finance its restructuring plans.
Felda is also expected to terminate a land lease agreement with FGV.
FGV suspended its shares from trading at 4.15 pm (0815 GMT) local time pending a "material announcement" and last traded at RM1.27 per share.
FGV said in a filing to the exchange that it had received a letter of notification from Felda and that trading of its shares will resume.