KUALA LUMPUR: Fraser & Neave Holdings Bhd's (F&N) acquisition of the entire equity stake in Ladang Permai Damai will be value-accretive as it will facilitate the operations of the group's integrated dairy farming project, says MIDF Research.

       According to the research firm, the purchase via F&N's 65%-owned subsidiary Dagang Sejahtera Sdn Bhd will enable the group to enter the upstream fresh milk business for downstream production and distribution of fresh milk.

       "After the completion of the acquisition, Ladang Permai Damai will lease the Permai Damai Estates to the F&N Group at a market rate to carry out operations of the integrated dairy farm and crop plantation.

       "This will enable the F&N Group to own a vertical integration business and operations based on locally grown crop for feed to F&N's dairy farm, which in turn will lower the value chain cost per litre," it said in a note.

       Meanwhile, MIDF said the purchase consideration of RM215.5mil gives Dagang Sejahtera a purchase price discount of RM8.6mil given the market value of RM224.2mil.

       The research firm said it expects the proposed acquisition to not have a substantial material impact on the gearing ratio of F&N.

       It maintained "buy" on the stock with an unchanged target price of RM30.03.