JAKARTA (TheInsiderStories)–Indonesia’s state-owned gas company PT Perusahaan Gas Negara Tbk (IDX: PGAS) shares fell by almost 10 per cent after the company announced the valuation PT Pertamina Gas (Pertagas) acquisition as part of the formation of oil and gas holding.
PGAS and its parent company PT Pertamina signed the conditional sales purchase agreement (CSPA) on June 29 on this acquisition. In accordance with CSPA, the next step is to complete the transaction within the next 90 days.
Along with the announcement was submitted to Indonesia Stock Exchange today, PGAS’s stock dropped 185 basis points or 9.49 per cent to Rp1,765 per share at 10.56 a.m.
The acquisition of Pertagas was carried out by buying 2,591,099 shares, equivalent to 51 per cent all issued and paid up capital in the company. The valuation of this 51 per cent stake is US$1,22 billion that will be paid in Indonesian rupiah with a total of Rp16.60 trillion or 38.46 per cent of the company’s equity.
After the acquisition, Pertamina’s share ownership in Pertagas is now only 49 percent. Meanwhile, the government owns 100 percent shares of Pertamina and 56.96 percent of PGAS shares.
The CSPA signing between Pertamina and PGAS is a follow up of the oil and state-owned oil and gas holding company that was established on April 11, 2018. The oil and gas holding was authorized through the signing of the transfer of Indonesian government stake in PGAS to Pertamina.
The plan to take over of PGAS by Pertamina has been floated since 2013, with goals aimed at creating a state-owned energy holding company that handles the management of gas infrastructure in Indonesia.
The takeover has stirred public debate and confusion among executives in both companies. However, the government proceeded with the plan on the belief it will benefit the entire nation.
The creation of this holding company was under a direction of President Joko Widodo as outlined in the State-owned Enterprises ministry’s roadmap plan submitted to the House of Representatives in December 2015.
By integrating the operation of PGAS and Pertagas, both companies could optimize their assets and avoid redundancy as well as creating the larger entity. The integration of both companies is also expected to help boost development of gas infrastructure in the country and ultimately giving wider access to the public to get gas supply.
The integration of gas sector from upstream, midstream and downstream will provide optimum benefits to Pertamina, PGAS and the public at large. From the financial perspective, the oil and gas holding is projected to increase investment capacity of both entities to Rp416 trillion or $32 billion in the next 15 years as well as resulting in value creation Rp329 trillion or US$25.3 billion.