JAKARTA (TheInsiderStories) – Indonesian food producer, PT Indofood CBP Sukses Makmur Tbk (ICBP) pocketed a syndicated facility loans up to US$2.05 billion with five years tenure to acquires Pinehill Co. Ltd., worth of $2.99 billion. Both parties has signed the loans agreement on August 18.
Accorting to the management, the lead arrangers and book-runners include Bank of China (Hong Kong) Ltd., BNP Paribas, Mizuho Bank Ltd., Singapore branch, Natixis Hong Kong branch, OCBC Ltd., and Sumitomo Mitsui Banking Corp., Singapore branch. The syndication commitment is provided without guarantee.
“With the signing of the loan facility agreement and the fulfillment of all the requirements for the withdrawal of the facility, all the requirements for the acquisition transaction plan have been fulfilled, so that the company can complete the transaction by the end of August 2020,” it said on Wednesday.
Apart from the syndicated loans, Pinehill’ source of financing also came from Indofood CBP‘ internal cash of $300 million and other long-term liabilities of $650 million. Pinehill Corpora is recorded owned 51 percent of Pinehil shares and the rest hold by Steele Lake. The president director, Anthoni Salim, indirectly controls 49 percent of Pinehill Corpora’ shares
As a result, Pinehill Corpora and Steele Lake have the potential to receive payments of $1.19 billion and $1.46 billion, respectively. Previously, the food producer had obtained shareholder approval regarding the acquisition planned on August 3.
This agreement fulfills the approval of the independent shareholders of First Pacific Co. Ltd., the controller of PT Indofood Sukses Makmur Tbk (IDX: INDF), which was obtained on July 17. Acquisition of Pinehill is an ambition of the Salim Group through Indofood CBP.
This transaction will increase the company’ market position in the eight countries where Pinehill operates. This is also expected to boost the company’ revenues and profit growth by around 20 percent per year.
Earlier the management rated, Pinehill‘ fair market value based on the adjusted value book calculation is $2.86 billion. This indicates that the acquisition value is 4.7 percent higher than the fair market value.
The analysts rated, the rapid growth in sales of branded consumer products and the increase in the selling price of crude palm oil will encourage sustainable growth in the financial performance of Indofood in this year. While, sales of wheat flour through its subsidiary, PT Bogasari Flour Mills, are predicted to tend to stagnate.
According to Sinarmas Sekuritas analyst, Paulina, the company that produces fast-moving consumer goods showed a trend of sales growth until the second semester of this year, which is supported by the desire of households to maintain household appliances, despite the economy was in turmoil.
“We see that this will have a positive impact on sales of the company’ branded products through its subsidiary, Indofood CBP, until the end of 2020. Moreover, most of the company’ products have become market leaders in the country,” she wrote in her latest report.
Apart from these factors, Indofood will also benefit from a decrease in raw material prices, which could boost profit margins. The company’ agribusiness will also reap profits in line with the increasing trend of palm oil selling price which will support the company’s financial performance growth.
But, the distribution business and Bogasari are expected to weaken until the end of this year. This is influenced by the decrease in the volume of goods distributed amid the lower demand. The unit’ sales growth only reached 3.5 percent with a lower profit margin due to the increase in raw material purchase prices and lower demand from the small and medium business segment after being affected by the pandemic.
While, Danareksa Sekuritas analystm Natalia Sutanto assessed that the realization of the company’ product grew better than its sector during the first semester of 2020. As reported, Indofood posted an increase in net profit from Rp2.54 trillion in the first semester of 2019 to Rp2.84 trillion ($194.53 million) in the first semester of this year.
The high increase in net profit was in line with the increase in net profit margin from 6.6 percent to 7.2 percent. However, the sales only rose 2 percent from Rp38.61 trillion to Rp39.38 trillion.
Indofood is a producer of instant noodles and wheat flour with the largest market share in Indonesia.
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