TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Matahari summoned over $770m acquisition
The stock exchange authority will summon the management of the publicly listed department store PT Matahari Putra Prima (MPPA) to seek detailed information over the acquisition of its subsidiary PT Matahari Department Store (MDS) by a joint venture with the Meadow Asia Company
Change Size
T
he stock exchange authority will summon the management of the publicly listed department store PT Matahari Putra Prima (MPPA) to seek detailed information over the acquisition of its subsidiary PT Matahari Department Store (MDS) by a joint venture with the Meadow Asia Company.
"We will summon the company's management this week," the Indonesian Stock Exchange (IDX) director for corporate listing Eddy Sugito said in Jakarta on Wednesday.
MPPA has agreed to sell its entire 90.76 percent stake in its department store subsidiary to the Meadow Asia Company for Rp 7.17 trillion (about US$770 million). Meadow Asia is a joint venture established by MPPA with it having a 20 percent stake and CVC Capital Partners having an 80 percent stake.
CVC Capital Partners is a global private equity and investment advisory firm, headquartered in Luxembourg with a network of 19 offices across Europe, Asia and the US. The funds under its management total $45 billion.
At present, MPPA has a 90.76 percent stake in the department store subsidiary while Pacific Asia Holding and the public own 7.24 percent and 2 percent respectively. Meadow will also buy Asia Holding's 7.24 percent stake to increase its ownership to 98 percent.
According to Eddy, so far the IDX has received some information about the acquisition from the MPPA public expose last week, but "We need more detailed information, including about the establishment of the Meadow Asia Company," he said.
However, Eddy said that such an acquisition would be permissible as long as it reflected the realistic value of the company and could bring advantages to stakeholders.
On Tuesday MPPA President Director Benjamin J. Mailool said that the company had decided to sell its stake in MDS to another company to strengthen its capital structure to further expand its retail business in the future.
"We will also ask approval from an extraordinary shareholders general meeting soon," Benjamin said.
Financial analysts said that this type of transaction was quite common and often done by companies, even if MPPA as the owner of the department store established a joint venture with another company to buy its own stake.
"The acquisition will strengthen MPPA's capital structure and improve its book value," Financial Corpindo analyst Erwin Sinaga said.
However, BNI Securities analyst M. Al Fatih questioned the deal. "The core question is why the price of shares *agreed* is more expensive rather than the price in the stock market. It is the Capital Market Supervisory Agency *Bapepam*'s duty to check," Al Fatih said in Jakarta on Tuesday.
Meadow agreed to buy the shares for Rp 2,705 each, about 100 percent higher than the company's market price. The share price jumped 12 percent to Rp 1,250, the steepest gain since Feb. 26, 2008 on Tuesday following the announcement of the acquisition deal.
In 2010, MPPA allocated Rp 1.2 trillion of capital expenditure (capex) to be financed by its internal budget. The company plans to develop 150 new retail outlets in the next 10 years requiring an investment of Rp 40 billion each.
