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.
Salim’s Indofood offers China Minzhong buyout
Change Size
Publicly listed Indofood Sukses Makmur’s president director Anthoni Salim (left to right), along with Indofood directors Axton Salim and Fransiscus Welirang, prepares to leave the company's annual shareholders meeting in Jakarta on May 8, 2015. (The Jakarta Post/Don)
A
company controlled by billionaire Anthoni Salim offered to acquire the rest of China Minzhong Food Corp. in a deal valuing the Chinese company at S$786 million (US$584 million), helping the Indonesian tycoon expand a food empire spanning potato chips, instant noodles and cooking oil.
Salim’s Indofood Sukses Makmur will sell its entire 82.88 percent stake in vegetable processor China Minzhong Food Corp. Ltd. to an investment vehicle controlled by the Indonesian firm’s top executive for US$484.1 million, Reuters reported.
The deal, which was announced in a stock exchange filing on Wednesday, means Indofood has scrapped its earlier plan to sell 52.94 percent of China Minzhong to a vehicle controlled by the Singapore-listed company’s senior executives.
Under the latest agreement, Marvellous Glory Holdings will pay for Indofood’s entire China Minzhong stake with S$416.4 million in cash and the rest in bonds. Indofood will exchange the bonds for 29.94 percent of China Minzhong.
Marvellous offered S$1.20 in cash for each share in Singapore-listed China Minzhong Food, or 25 percent more the stock’s last closing price. The shares traded at S$1.125 as of 11:24 a.m. in Singapore.
Despite the weak global macro-economic conditions, Indofood said it believes in the long-term prospects of China Minzhong, which processes vegetables such as champignon mushrooms and black
fungus.
The Indonesian company, one of the world’s biggest instant noodle makers, also said it chose to retain a reduced stake in China Minzhong due to the “possibility of realizing synergies” between their businesses.
Salim has a net worth of $3.3 billion, according to the Bloomberg Billionaires Index. His First Pacific Co., through Jakarta-listed PT Indofood Sukses Makmur, owns 82.88 percent of China Minzhong Food. Salim has a combined direct and indirect interest of about 45.11 percent in First Pacific, the filing showed.
“Valuations have been beaten down so there is a lot of incentive to take them private,” said Jeremy Teong, an analyst at Phillip Securities Pte. in Singapore.
China Minzhong said the proposal would allow “greater control and management flexibility” in implementing “strategic initiatives,” according to the filing. The offer is contingent on the acquirer gaining acceptances for shares carrying more than 50 percent of voting rights, according to the document.
Brokerage Maybank Kim Eng said in a note to clients on Wednesday that the move is positive for Indofood as it may lead to a lighter balance sheet, lower foreign exchange exposure and improved returns for its capital allocation.
China Minzhong shares surged as much as 20 percent to their highest in more than three years, while Indofood rose 1.5 percent as of 3:35 p.m. on Wednesday to Rp 8,500 apiece. The stocks have surged 68 percent so far this year, easily outperforming the broader benchmark Jakarta Composite Index’s s (JCI) 17 percent gain.
A takeout of the Chinese vegetable-growing and processing company would add to more than a dozen delistings in Singapore — with a combined market value of S$4.5 billion – in the first half of 2016 alone, according to data compiled by Bloomberg.
