I think there are genuine concerns expressed by various quarters on Felda’s proposed purchase of a 37 percent stake in PT Eagle High Plantation (EHP) in Indonesia.

Would Felda get to control EHP after the purchase? If not, why buy EHP shares at high premium (as high as 173 percent as reported) over its market price?

Felda argued that the market price of EHP shares is not a true reflection of the value of the company. It clarified that the share price is not “an accepted valuation method” when it comes to a plantation company.

This is where I don’t quite understand; if market price is below valuation, why not just buy from the market? After all, Felda is not buying a controlling stake, is it?

Why should buying a plantation company be any different from buying other businesses? We buy an asset for its income generating ability. I am sure the market is able to reflect that to some extent. If not, we are basically assuming that the Jakarta Stock Exchange serves no purpose.

There is no logic to the argument that the share price of EHP is not reflective of “true valuation” simply because the company is 70 percent controlled by its major shareholder. In fact, market price should work to its favour if the shares are tightly held.

Felda is adamant to buy EHP because it is a “good deal” according to the company. Now, if it is a good deal to the buyer, can we assume it is a poor deal to the seller? Naturally many would ask why the seller is so willing to sell if it is a good buy to the buyer. I think it is good to know whether there are others serious bidders for this stake in EHP beside Felda?

There are reasons why Felda must take cognisance of the concerns expressed by others in this deal. If Felda’s past investment ventures have been found wanting, it is natural for many to ask why would the next one be any different? More so the price to be paid is 173 percent higher than market price which Felda said is not reflective of the true value.

To be fair, Felda quoted some recent transactions involving Indonesian oil palm companies, the prices of which were comparable with or even higher than its offer to EHP. To this, I must say that no two plantations are the same in terms of location, average age of trees, productivity, and future potential.

I think Felda should stop using arguments like the deal will not adversely affect the well-being of the settlers. The most important thing is whether the investment will add value and bring positive returns to the company. If not, the welfare of the settlers will be affected. If they are not, the taxpayers will be. I think we should start talking sense and stop talking nonsense.