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FGV Says It Has Stopped Its Acquisition Spree
  • Felda Global Ventures Holdings (FGV), whose acquisitions have been criticised as being pricey, has said that it will not be pursuing more acquisitions.
  • Instead, the group will be looking into the whole value chain, from downstream to upstream, with an aim to consolidate operations. The focus will be on integrating and extracting efficiencies of recent acquisitions.
  • In the last three years, the firm has spent more than RM4 billion on mergers and acquisitions, comprising mainly brownfield plantations to fast-track growth expansion and improve its crop age profile. In June alone, two new acquisitions was proposed – Golden Land’s plantation in Sabah and a 37 percent stake in Eagle High. Concerns was raised over the perceived high price of the Eagle High deal.

Significance: While the management sees the deals as beneficial to the company, FGV’s share price (lost about 61 percent in value) has been battered in the past one year due to the drop in crude palm oil (CPO) prices. However, it was noted that a relatively strong recovery can be expected when CPO prices rise, since 70 percent of revenue is derived from plantations.

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