Japfa plans to merge with subsidiaries

Publicly listed agri-food companies PT Japfa Compeed Indonesia says it wants to merge with livestock and poultry subsidiary PT Multibreeder Adirama Indonesia and affiliates PT Multiphala Adiputra and PT Hidon.

“The merger is expected to lead to good synergy so that the company can perform the development of DOC [day-old chicks] facilities for production,” Japfa said in a statement on Wednesday.

The statement said that the increase in DOC production would boost demand for feed for chicken breeders and broilers and would also influence the growth of Indonesia’s animal feed industry.

The merger was also expected to create cost efficiencies equal to 3 percent of the company’s total operational expenses, the statement added.

A shareholders meeting will be carried out on Thursday to approve the mergers.

Japfa currently holds a 73.39 percent stake in Multibreeder.

According to the statement, Japfa would issue 60.37 million in new shares in return for the 26.61 percent Multibreeder stake currently held by the public.

“The exchange will give a liquidity benefit to Multibreeder’s public shareholders, recalling that historically Japfa shares have been more liquid than Multibreeder’s,” the statement said.

Multiphala and Hidon will be directly incorporated into Japfa, as the two companies are wholly owned by Multibreeder. The announcement said that one Multibreeder share would be exchanged for 3.025 Japfa A series shares.

Public shareholders who do not want Japfa shares would be allowed to ask Japfa, through appointed brokerage company PT Buana Capital, to purchase their shares at a fair value, which has been set at
Rp 4,325 (US 4.67 cents) and Rp 13,164 for Japfa and Multibreeder shares respectively.

Share purchases for shareholders disagreeing with the merger will be performed on June 29.

Shares in Japfa (JPFA) were unchanged, trading at Rp 4,350 a piece on Wednesday, creating a market capitalization worth Rp 9.01 trillion. Meanwhile, shares in Multibreeder closed at Rp 12,200 a piece, up 1.67 percent from Rp 12,000 a day earlier. Multibreeder’s market capitalization was Rp 915 billion as of Wednesday.

Japfa will keep shares obtained from the public as result of the merger as treasury stock.

After the merger, Japfa will be 56.67 percent owned by Malvolia Pte. Ltd, which prior to the plan held 58.32 percent A and B series shares. The remaining 43.33 percent stake in Japfa will be held by the public after the merger.

— JP/Raras Cahyafitri