PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) is disposing of its 30% stake in Taiko Clay Chemicals Sdn Bhd for RM145 million, as part of the group’s efforts to dispose of non-core businesses.
FGV told Bursa Malaysia that its 72%-owned subsidiary Felda Palm Industries Sdn Bhd, which in turn a wholly owned subsidiary of FGV, yesterday entered into an agreement with Orient View Sdn Bhd for the proposed disposal.
Taiko Clay Chemicals is involved in manufacture and sale of activated bleaching earth and related products; production of sulphuric acid, oleum and battery acid; general trading and manufacturing of aluminium sulphate.
FGV’s original cost of investment in Taiko Clay Chemicals is RM41.45 million, which will bring a one-off gain on disposal of RM16.06 million.
Taiko Chemical Industries Sdn Bhd and Batu Kawan Bhd own 62% and 8% equity interest in Taiko Clay Chemicals each.
The audited net profit of Taiko Clay Chemicals for the financial year ended Dec 31, 2016 and 2017 was RM55.61 million and RM61.74 million, respectively.
Explaining the rationale behind the divestment, FGV said Taiko Clay Chemicals’ overseas expansion plan will likely require additional capital injection from its shareholders.
“Given that FGV views its interest in TCC (Taiko Clay Chemicals) as an investment in a non-core business, additional capital injection into TCC does not correspond with the objectives under SP20 (2020 Strategic Plan) and deviates from FGV’s current focus on the performance of its core businesses,” it added.
FGV also noted that Taiko Clay Chemicals may see a constraint in paying dividends in the future with its expansion plan. Since its investment in Taiko Clay Chemicals in 1997, Felda Palm Industries has received a total of RM58.6 million in dividends from Taiko Clay Chemicals.
On Bursa Malaysia today, FGV gained 19 sen or 11.8% to RM1.80 on volume of 108.2 million shares.