How is FGV planning to finance the EHP stake purchase?

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FGV Proposes a Combination of Cash and Share Issuance for EHP Stake Acquisition

Felda Global Ventures Holdings Bhd (FGV) is planning to finance its proposed acquisition of a 37 per cent stake in PT Eagle High Plantations (EHP) through a mix of cash payment and the issuance of new FGV shares. This proposed financing structure is part of the larger deal to acquire the stake from EHP's controlling shareholder, Rajawali Corporation.
Cash Component for Majority Stake

FGV intends to allocate US$632 million in cash towards the acquisition. This substantial cash outlay is designated for securing a 30 per cent stake in EHP, forming the primary component of the transaction. The effective valuation of the entire 37 per cent stake is reported to be approximately US$680 million.
Share Issuance for Remaining Stake

The remaining 7.0 per cent stake in EHP is planned to be settled through the issuance of 95 million new FGV shares. This method of payment allows FGV to conserve cash while still completing the acquisition. The total value of the deal, encompassing both cash and share components, has been a subject of discussion regarding its valuation.
Context of Valuation Concerns

The Employees Provident Fund (EPF), a shareholder in FGV, has publicly expressed hopes that FGV will address valuation concerns surrounding the acquisition. An EPF representative raised questions at FGV's annual general meeting regarding the rationale behind the US$680 million price tag and the reportedly generous premium. While the EPF has voiced its concerns, the final decision on the transaction is still subject to due diligence and a future shareholders' vote.

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How is FGV planning to finance the EHP stake purchase?

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