Ideas: Why is Felda paying so much for Indonesian company?

Facebook
Facebook
Google+
http://hakam.org.my/wp/2016/12/24/ideas-why-is-felda-paying-so-much-for-indonesian-company/
SHARE

Source: FMT News

There are lots of questions about the deal and the premium price fuels speculation, says Ideas CEO. Pic taken from FMT News.

There are lots of questions about the deal and the premium price fuels speculation, says Ideas CEO. Pic taken from FMT News.

PETALING JAYA: Federal Land Development Authority (Felda) must answer why it chose to pay a high price to acquire PT Eagle High Plantations.

Wan Saiful Wan Jan, who heads the Institute for Democracy and Economic Affairs (Ideas), said the main focus right now is the risks the deal may pose to taxpayers.

“It is mysterious to me how better shareholder value will be created when it looks like Felda is paying a very high price for Eagle High’s shares.

“Felda has to answer why they agreed to this high premium. There is already a lot of questions about the deal and this premium adds to the negative speculation about it,” he said in a statement today.

Wan Saiful added that as Felda is a government-linked company, it would be unacceptable if the deal it undertook left taxpayers at risk, or if the deal turns out to be bad.

“If the risk to taxpayers can be managed, then I hope the deal will create the synergy that Felda wants and that it will create greater shareholder value,” he said.

Felda yesterday announced the acquisition of the Jakarta-listed company, paving the way for access to more than 320,000ha of Indonesian land, about 4.4 times the size of Singapore.

The purchase of a 37% equity stake in Eagle High was made at US$505.4 million (RM2.26 billion).

Wan Saiful said if the deal was struck at the right price, it could be a good opportunity for Felda to grow its businesses.