Felda Global Ventures Holdings Bhd (FGV), the world’s largest producer of crude palm oil, is seeking a buyer for peripheral assets in North America, according to people.
Bloomberg reported that the Malaysian conglomerate has invited offers for its crushing and refining businesses in the US and Canada, quoting people with knowledge of the matter said.
“Suitors have submitted first-round bids for the operations, which could fetch about $150 million,” the sources said.
FGV had said earlier this year it will sell some assets as it seeks to increase its core palm oil plantation business, expand trading operations and develop new markets.
Recently, research houses had said that analysts are speculating that FGV will likely dispose of its non-profitable Canada-based canola and soybean crushing plant, which was badly hit by lower crushing margins in North America.
The firm has a Canada-based subsidiary which does soybean and canola crushing. The subsidiary, recorded a pretax loss of MYR81.8 million ($21.9 million) last year, according to its 2014 annual report, affecting FGV’s downstream oleochemicals operations.
Its US oleochemical business recorded a profit of MYR36.5 million for the period.
The company said its downstream operations were affected by losses at the oleochemicals segment, as production was affected by blizzards that hit in January this year, and by lower soybean crush margins at its Canadian businesses.
FGV was the largest initial public offering in 2012, having raised $3.3 billion. The stock share price has not trended upwards. To-date, the share price has dropped 12 per cent this year compared to the 1.5 per cent decline in the benchmark FTSE Bursa Malaysia KLCI Index.
While FGV is expected to post sequentially stronger earnings in the coming quarters, lower oil palm fresh fruit bunch (FFB) output and downstream losses will persist, Malaysia-based Maybank Research had said in a note.
Felda has operations in more than 10 countries across Asia, North America and Europe including upstream and downstream palm oil, rubber, sugar and logistics. Last month, it announced a 98 per cent drop in first quarter net income on lower palm oil prices.
The company responded to Bloomberg in an emailed statement it doesn’t comment on planned acquisitions or divestitures.