Ioi Introduction

1. You work as a Financial Analyst for the CFO of Felda Group Ventures Bhd (FGV) one of the largest plantation companies in the world and listed on the Bursa Malaysia (formerly the Kuala Lumpur Stock Exchange).

FGV are considering the possible acquisition of a large Malaysian or ASEAN based plantation group to further strengthen the market dominance in this sector. The initial research has identified two potential acquisition targets. One is the IOI group and the other is the KLK group. Both companies are listed on the Bursa Malaysia.

The CFO has asked you to write a brief internal management memo that summarises the current businesses of each of these two companies, together with a short assessment of the impact of the recent economic conditions on them

Introduction :

IOI Group :

Industrial Oxygen Incorporated Sdn Bhd which is widely known as IOI, is a massive palm oil player in Malaysia. For the past 2 decades, IOI has shown a accelerating growth. IOI’s businesses started off with property and palm plantations. Although IOI was a late comer into the palm oil industry, it growth happened naturally and through investment, and, in 2010, has sales of about US$4.3 billion and up to 30,000 people were employed.

After all these years, IOI Group has gradually exit from an important product, which is producing crude palm oil (CPO). Then, IOI has went on to a strategy of merging 2 businesses together by moving into downstream activities such as food ingredients manufacturing and oleochemicals. The steps taken by IOI has transformed IOI from a plain Malaysian plantation company to a global ingredients manufacturer.

From this study, the author will be discussing on the strengths of IOI which contributes to its competitiveness. Also, the weakness of IOI which affects its competitiveness will be critically analysed. The treats and opportunities that IOI is facing is important to be discussed in order for the author to be able to suggest if IOI is...