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.
Slow economy put brakes on M&A: Accenture
Indonesia will likely see the transaction value from mergers and acquisitions this year reach US$9 billion â similar to the value from last year â as the domestic economy is slowing down, according to business consulting company Accenture
Change Size
Indonesia will likely see the transaction value from mergers and acquisitions this year reach US$9 billion ' similar to the value from last year ' as the domestic economy is slowing down, according to business consulting company Accenture.
The telecommunications, retail, banking and real estate sectors are predicted to contribute most to the merger and acquisition value.
'As we have seen, the [composite] index declined to its lowest days ago. This is not good news. The President said he would take measures to boost the economy and it will take time [...]. But there is a chance this year that [transactions] will reach the 2014 level,' said Bruce Delteil, Accenture merger and acquisition lead for Asia Pacific, at a press briefing on Tuesday.
'We still have a positive outlook,' he added.
This year's merger and acquisition transaction would depend on the economic growth, as well as the confidence in economic stability and consolidation of the industry in the country, he said.
The investor's trust was deemed crucial as 60 percent of the transactions of the mergers and acquisitions were performed by foreign companies. He expected the value would go up next year.
'The economy [next year] should be better, the stock exchange should improve and the government will have implemented some important reform. So we're optimistic,' he said.
The merger and acquisition in the telecommunication sector is evident with the merger among CDMA operators. Of course, there is ample opportunity for GSM operators to consolidate, Delteil said.
Previously, Communications and Information Minister Rudiantara said that his ministry would encourage telecommunication operators to merge with or acquire their competitors so that there would be three or four operators left, in order to provide a better competition landscape.
There are currently six operators in the country, including PT Telekomunikasi Selular (Telkomsel), PT Indosat, PT XL Axiata, PT Hutchison 3 Indonesia, PT Smartfren Telecom and PT Bakrie Telecom.
Smartfren and Bakrie have signed a deal for network sharing, while XL Axiata has acquired Axis Telekom Indonesia in March 2014 in a $865 million investment.
Meanwhile, Delteil said he expected to see more consolidation in the retail sector for Indonesia and ASEAN this year, despite the declining profit for retail as consumer purchasing power weakened.
'In ASEAN, the value of merger and acquisitions in retail reached $16 billion since 2012. [...]. There is also a big potential for mergers and acquisitions in consumer goods,' he said.
Some Indonesian retailers and consumer goods companies have performed various mergers and acquisitions in the last decade, including the acquisition by consumer goods giant PT Indofood CBP of milk manufacturer PT Danone Dairy Indonesia for Rp 250 billion ($18.3 million) last year.
European private-equity firm CVC Capital Partners has also bought an 80 percent stake in Matahari Department Store, the country's largest department store chain by sales, in April 2010 for $770 million.
In addition, Delteil also said that the smaller banks might also proceed with mergers and acquisitions with a push from the government.
The Financial Services Authority (OJK) has encouraged small lenders to merge into one large lender, to consolidate the nation's overall banking industry, which is deemed the most fragmented in the region with more than 100 banks.
He also urged the big banks to form alliances with the banks from the foreign market approaching the ASEAN Banking Integration Framework.
Indonesian companies' mergers and acquisitions have led to positive impacts on total return to shareholders with around 58 percent considered value creating out of the 50 biggest transactions that year, according to 2012 research by Accenture. (fsu)
