Shareholders of the world's largest instant noodle maker PT Indofood Sukses Makmur approved at an extraordinary meeting on Friday the company's proposed takeover of Drayton Pte Ltd, which owns controlling shares in dairy producer PT Indolakto.
Indofood will spend US$350 million to buy 100 percent of Drayton from Pastilla Investment Ltd, as well as a debt worth $100.5 million.
Drayton is a Singapore-based company that owns 68.57 percent of shares in Indolakto, whose major brand portfolio in the Indonesian market includes Indomilk, Cap Enaak, Tiga Sapi, Orchid Butter and Indoeskrim.
The company said the acquisition was expected to bolster the company's revenue from sales of consumer-branded products (CBP), 91 percent of which is currently contributed by the sales of noodles.
"We are expecting sales of dairy products to contribute around 19 percent to our CBP sales, while noodles can be lowered to 72 percent," Indofood vice president Fransiscus Welirang said at a press conference.
Aside from CBPs, Indofood also derives revenue from flour sales, agribusiness and distribution services.
The company says the acquisition will be 40 percent financed by its internal cash, with the remaining 60 percent to come from a loan from a banking syndicate.
"We are now finalizing a deal with a consortium consisting of local and overseas banks, but we can't name the banks until the deal is completed," finance director Thomas Tjhie said.
The company expects to wrap up the loan deal on Dec. 17 to meet the payment deadline for the Indolakto acquisition by the end of the year.
As reported earlier, the company paid 15 percent of the purchase amount, or $52.5 million, as part of a deal signed in September.
The Salim Group, which owns Indofood, held a stake in Indolakto before selling its shares in exchange for a government bailout after being hit by the late-1997 Asian financial crisis.
Investment in the milk industry was deemed a potential boon because Indonesia's per capita milk consumption lags behind that of neighboring countries.
According to USDA Global Agriculture Information Network, the annual Indonesian milk consumption is 7.7 kilograms per capita, much lower than consumption in Malaysia, Thailand, the Philippines and Cambodia. (hwa)
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