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Summary of FGV’s interview with Bloomberg on FGV-Eagle High Plantation Proposed Partnership
Comparison to other deals
1. The proposed partnership’s price is lowest for FGV and in comparison to other Malaysian players:
a. Under FGV: 1) $23.5k/ha for Pontian United Plantations Berhad, 2) $23k/ha for Asian Plantations Ltd and 3) $20.4k/ha for Golden Land Bhd
b. Others: 1) IOI Corp Bhd paid $24.6k-$25.3k/ha for Unico-Desa Plantations Bhd, 2) Sime Darby Plantation paid $25.9k/ha for NBPOL (New Britain Palm Oil Limited) and 3) PT Borneo Pacific bought TH Plantation Berhad’s Indonesian assets at $17.7k/ha.
2. The above mentioned acquisitions are much smaller in size than the FGV-EHP deal.
3. First Resources and Bumitama are trading at $15-17k/ha. IOI already has 31.3% stake in Bumitama, which makes it no longer viable.
4. Other listed plantations that have a size of over 100,000 ha planted area are not available for sale, so naturally there will be a premium as compared to smaller plantations.
5. The transaction creates significant value to FGV shareholders by providing access to a formidable Indonesian platform with significant revenue and cross-selling opportunities through Rajawali’s extensive network and credentials.
Higher price paid for EHP, compared to 1.5 years ago
1. Rajawali purchased BWPT (PT BW Plantation Tbk) 1.5 years ago, at $15k-$16k/ha and at the time BWPT was only 60,000ha with a maturity profile of XXX.
2. Today, BWPT has over 150,000 ha planted area with a maturity profile of XXX and with improvements made to the plantation.
3. Rajawali purchased BWPT at over Rp1,000 per share.
4. FGV is not purchasing EHP at Rp780.
EHP’s perceived share price premium in the FGV-EHP proposed partnership
1. EHP’s share price was Rp450 when the deal was announced at Rp780. This is only 73% premium, not 200% as certain quarters claim.
2. The rights offering undertaken previously was an initiative to integrate and merge BW and Green Eagle together. Rajawali could have set the rights offering price to something higher than Rp400 per share – however, giving lower valuations during such transactions is commonly done when there are public shareholders involved, who would benefit from lower valuations.
1. This deal and its corresponding deposit are entirely commercially driven.
2. It is customary for a key transactions to have deposits – the terms of which are derived from bilateral negotiation.
3. FGV’s deposit aims to prove its commitment and lock in the deal, thereby terminating Rajawali’s discussions with others, and provide exclusivity so FGV can conduct due diligence.
4. The deposit is fully refundable with accrued interest in the event the FGV’s BOD does not approve the transaction or regulatory and shareholders’ approval are not obtained.
For more information, please do not hesitate to contact FGV at email@example.com.