• Felda Global Ventures Holdings’ (FGV) unit, Felda Global Ventures Downstream, has called off its proposed RM976.3 million acquisition of a 55 percent stake in China-based edible oil producer Zhong Ling Nutril-Oil Holdings.
  • The cancellation was because conditions precedent set out in the two conditional sale and purchase agreements could not be fulfilled within the stipulated time, though the company did not say which conditions were not met.
  • CIMB Equities Research is positive on the decision to abort the deal – which came eight days after FGV appointed Datuk Zakaria Arshad as its new group chief executive officer (CEO) – as it opined that the acquisition could have diluted the future earnings of the group.
  • The research house also noted that the decision could suggest the company may focus on improving efficiency and profitability of its existing plantation and downstream assets, instead of pursuing mergers and acquisitions.

Significance: Despite being positive on the cancellation of the China deal, CIMB Research has maintained its ‘Reduce’ rating on the stock due to concerns over weak earnings, on the back of declining fresh fruit bunches output.

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