THE Federal Land Development Authority (Felda) has signed a deal with Rajawali Group to acquire a significant stake in the latter’s PT Eagle High Plantations Tbk (EHP), one of Indonesia’s largest palm oil companies.
Under the agreement, Felda’s subsidiary, FIC Properties Sdn Bhd, will acquire a 37 per cent stake in Jakarta-listed Eagle High Plantations for US$505.4 million (RM2.3 billion).
The acquisition will give Felda access to more than 320,000 hectares of landbank in Indonesia (about 4.4 times the size of Singapore), including more than 125,000ha of planted nucleus.
In a statement yesterday, Felda said the stake acquisition was in line with its long-term goal to become among the world’s largest palm oil groups.
“We have to continue to show growth as staying stagnant will mean that Felda will be left behind as our competitors are expanding fast in this growing industry,” the group said.
“To get this growth, Felda needs to venture into new frontiers as additional plantation land in Malaysia is becoming scarce,” it added.
A market observer has compared Felda’s buy into Eagle High with Kuala Lumpur Kepong Bhd’s failed attempts to acquire Indonesian planter MP Evans Group Plc.
“MP Evans’s independent valuation put their value at US$17,300 per ha while the company’s board asked for US$24,000 per ha. At US$505.4 million, Felda is purchasing the 37 per cent stake in Eagle High at US$16,000 per ha for planted land that is four times that of MP Evans’s 31,400ha.
“Eagle High’s planted area is 125,000ha. Therefore, it can be said Felda is purchasing access into land four times the size of MP Evans at a cheaper price than latter’s independent valuation,” said the observer.
Separately, Rajawali Group deputy managing director Satrio Tjai said the deal was a significant milestone in the lengthy negotiation process.
He said Rajawali Group could confirm the stake sale in Eagle High to Felda was finalised.
“It is now pending approval from authorities in Indonesia and Malaysia. As such, we are in no position to comment further,” Satrio said in a statement.
Once approved, the acquisition is expected to strengthen bilateral ties between Indonesia and Malaysia.
It will also provide momentum for a solid partnership to promote global agenda for oil palm planters via the Council of Palm Oil Producing Countries.
Rajawali Group is operating across a wide range of industries including hotel and property, agriculture, mining, infrastructure, transportation and media.
On the Jakarta Stock Exchange yesterday, Eagle High shares closed 24 rupiah, or more than eight per cent, higher at 290 rupiah (about one sen).
Meanwhile, on Bursa Malaysia, FGV shares tumbled 5.6 per cent yesterday to RM1.53.