MALAYSIAN tycoon Syed Mokhtar Albukhary is seeking to combine his plantation assets with those of FGV Holdings in a potential merger aimed at securing a stake in one of Malaysia's biggest palm oil producers. FGV shares rallied.
Perspective Land (M), which he owns, intends to "inject" its plantation assets into FGV, said a filing from FGV on Thursday.
The closely-held company would potentially become the single largest shareholder in FGV if the transaction comes to fruition, it said.
A merger could bolster FGV's fortunes and challenge rival Sime Darby Plantations position as the world's top palm oil producer.
Formerly called Felda Global Ventures Holdings, it was a high-flying stock when it listed in 2012, following a US$3.3 billion initial public offering.
FGV's shares climbed as much as 7.5 per cent to RM1.15 (S$0.38) - the most since July 20. It had traded at as high as RM5.50 in July 2012.
Some analysts said the proposal lacked details on how the merger would create value for shareholders.
Ivy Ng, head of research at CGS-CIMB Securities in Kuala Lumpur said on Friday: "There are no solid numbers or materials issued." She kept her "hold" recommendation on FGV and kept target price unchanged at RM1.21.
A merger would see FGV owning about 473,000 acres of plantation assets, showed data from the companies' websites. Sime Darby has 590,000 acres.
Under a new management, FGV had been selling off non-performing assets, cutting costs and boosting productivity in its palm operations.
Mr Syed Mokhtar's offer comes weeks after the US blocked imports of palm oil and related products from FGV on indications that the company uses forced labour.
FGV on Thursday said the US authority found 11 indicators of forced labour in the company's practices, without providing details. North America accounts for about 5 per cent of FGV's sales. BLOOMBERG