Felda Global shares sold down on proposed Rajawali deal

Kuala Lumpur

ALREADY the worst-performing plantation stock this year, Malaysia's state-owned Felda Global Ventures Bhd (FGV) appears to have made another misstep with its proposed purchase of plantation assets of Indonesia's Rajawali Capital International as investors, deeming the acquisition too expensive, sold down its shares by slightly over 11 per cent to RM1.65 on Monday.

FGV signed a heads of agreement with Rajawali last week to acquire 37 per cent of Indonesia stock exchange-listed Eagle High Plantations for US$680 million in a cash and new FGV shares deal. It will pay US$632 million cash. Analysts concurred the deal was too pricey in an environment of low crude palm oil (CPO) prices as the deal works out to about 780 rupiah per Eagle share or a 72 per cent premium over its Friday closing price. Moreover, it gives it the biggest shareholding but not majority or management control