Bapepam issues ruling on hostile takeover<\/p>\n
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam)
\nfinally issued a long-awaited ruling yesterday which is designed
\nto prevent the takeover of listed companies.<\/p>\n
Bacelius Ruru, the chairman of the capital market watchdog,
\nsaid that under the new ruling, which became effective
\nimmediately, the purchase of 20 percent or more of the shares in
\na listed company must be publicly tendered.<\/p>\n
Bapepam's plan to introduce the tender offer requirement code
\nwas unveiled a week after the controversial purchase of a
\nmajority shareholding in the publicly-listed Bank Papan Sejahtera
\nby businessman Joppie Widjaya in early June.<\/p>\n
However, Ruru denied yesterday that the ruling had been issued
\nin response to the June takeover, saying that the new provision
\nhad been in the works for a long time.<\/p>\n
The public tender offer requirement extends to transactions
\nwhich result in an increase in the holding of an existing
\nshareholder to 20 percent or more.<\/p>\n
Under the new ruling, the tender offer must be announced in at
\nleast two widely-circulated newspapers and be submitted to
\nBapepam for an approval.<\/p>\n
The target company, its affiliates or those simultaneously
\nmaking a similar bid are allowed to oppose the tender offer by
\nissuing a written statement to the first bidder, a copy of which
\nmust also be sent to Bapepam.<\/p>\n
\"If the management or the supervisory board of the target
\ncompany feel that the information published by the bidder is
\nmisleading, they are also allowed to announce their objections in
\nnewspapers up to 15 days before the end of the bidding period,\"
\nRuru said.<\/p>\n
Higher<\/p>\n
He said the bidding price must be higher than the price of
\nthe shares within 90 days before the tender offer is announced
\nor, alternatively, be higher than that offered by the first
\nbidder.<\/p>\n
He said that if the purchase of a company's shares results in
\na decrease in the number of shareholders to below the exchange's
\nmandated minimum number of 200, the target company shall be
\ndelisted or \"sent private\".<\/p>\n
\"If that happens, the bidder must buy all the shares held by
\nthe investing public under the same price arrangement,\" he said,
\nadding that if the takeover is made under a stock-swap
\narrangement, the investing public must be given two alternatives:
\nto receive shares or cash.<\/p>\n
Another significant provision in the ruling prohibits a
\nbidding party from leaking their bidding plan to any parties
\nwithin 15 days before the tender offer is formally announced to
\nthe public, a rule designed to prevent insider trading.<\/p>\n
In addition, the bidder must prove that it has adequate funds
\nto carry out the purchase, Ruru said, adding that the bidder is
\nnot allowed to withdraw its bid once the offer has been disclosed
\nto the public.<\/p>\n
Asked why the tender offer requirement applies only to the
\npurchase of 20 percent of shares or more, given the fact that in
\nmany listed companies a controlling stake could be reached at a
\nmuch lower level, Ruru said that the ceiling is based on a ruling
\nof the Minister of Finance which defines a majority shareholder
\nas one owning 20 percent of a listed company's shares and a
\ncontrolling shareholder as one owning 25 percent or more.<\/p>\n
In certain listed companies such as Astra International, the
\nlargest shareholder owns only approximately 10 percent of the
\ntotal shares, due to a wide distribution of shares.<\/p>\n
\"In such a case, we have to abide by the Minister of Finance's
\nruling,\" he said.<\/p>\n
Regarding the takeover of at least 20 percent of shares of
\nlisted company by its affiliated firms, Ruru said that such a
\ntransaction is not covered by the newly-issued tender offer
\nruling.<\/p>\n
\"The ruling is aimed only at an independent buyer,\" he said,
\nadding that the purchase of shares by affiliated firms is
\nregulated under a different ruling which regulates share
\ntransactions by parties in respect of which there is a conflict
\nof interest.<\/p>\n
The sale of shares among affiliated shareholders requires the
\napproval of at least 55 percent of independent shareholders.
\n(hen)<\/p>",
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