Malaysia's Felda says to halt acquisition spree, following criticism

Palm oil mills being put to work
Palm oil mills being put to workPHOTO: BLOOMBERG

KUALA LUMPUR (REUTERS) - Malaysian palm plantation firm Felda Global Ventures Holdings Bhd is putting a hold on acquisitions after a three-year, US$2.5 billion (S$3.38 billion) spree designed to boost output and will now focus on consolidating investments.

The new strategy, disclosed in a statement on Tuesday, comes after the world's third-largest palm plantation operator said last month it planned to buy 37 per cent of Indonesia's PT Eagle High Plantations for US$680 million.

That deal was slated as being too expensive by analysts and politically motivated by opposition lawmakers, and Felda shares fell as much as 11 per cent to all-time lows.

Felda defended the transaction on Tuesday, describing the deal as "a game-changer for the palm oil industry."

The company said it was not seeking majority control in Eagle High, and that the deal was conditional upon the transaction not requiring Felda to make a mandatory offer for the whole company.

The stock was 0.61 per cent higher at RM1.64 at 0118GMT, while the Malaysian benchmark index was up 0.01 per cent.