Indocement splits from Indofood to better position<\/p>\n
JAKARTA (JP): Anthony Salim, chief executive officer of
\nIndocement, said Wednesday the company had sold its 50.1 percent
\nshare in Indofood so that the cement giant could concentrate on
\nits core business.<\/p>\n
Anthony said the separation of Indofood from Indocement would
\nalso improve the ability of the investing public to better
\nunderstand the business of the two separate entities.<\/p>\n
\"In addition, the management of the companies would be able to
\nfocus directly on their own operations and core competence,\" he
\nsaid.<\/p>\n
Indocement said the company now intended to strengthen its
\nleading market position while leveraging its competitive
\nadvantage as the industry's lowest-cost cementmaker.<\/p>\n
Under the massive deal announced Tuesday, Indocement's 50.1
\npercent in Indofood will be sold to Singapore-based QAF Ltd,
\nwhich is 70 percent owned by the Salim Group, and to the
\nSampoerna family, with a combined transaction value of Rp 4.68
\ntrillion (about US$1.95 billion).<\/p>\n
QAF will buy 39.56 percent while Sampoerna will take the
\nremaining 10.54 percent.<\/p>\n
Analysts welcomed the planned internal deal, saying the
\nIndocement's separation from Indofood was a positive sign for the
\ncompany's future expansion.<\/p>\n
\"With the separation, Indocement will have more leeway to
\ncarry out its cement business,\" one analyst said.<\/p>\n
The analysts said Salim Group's streamlining proposal was good
\nfor investors as this would make business assessments much
\neasier.<\/p>\n
\"At present, Indocement looks like a combined entity of food
\nand cement,\" he said \"If the deal is approved, investors will
\nview Indocement just as a cement producer, not a combination of
\nthe two.\"<\/p>\n
Indocement said earlier the company was currently constructing
\na new plant in Citereup, with a total investment of $229 million
\nand scheduled to be operational in mid-1999.<\/p>\n
The company is also constructing a cement plant in South
\nKalimantan with a total investment of $499 million.<\/p>\n
Some analysts, however, said the deal could have a negative
\nimpact on Indocement's price performance in the market.<\/p>\n
\"Indocement's profit could decline with the separation from
\nits profitable food business,\" one of the them said.<\/p>\n
Besides that, he said, cement oversupply would continue to
\nlast until 2003 and in turn this could have a negative impact on
\nIndocement.<\/p>\n
On Wednesday, Indocement's share price gained Rp 25 to close
\nat Rp 4,825 on a total volume of 13.91 million shares changing
\nhands on regular market, while Indofood shed Rp 50 to close at Rp
\n5,400 on a total volume of 42,500 shares.<\/p>\n
An analyst said Wednesday that the current market price for
\nIndocement was overvalued and therefore the company's share price
\nwas likely to decline in the coming years.<\/p>\n
\"I think a fair share price for Indocement is around Rp
\n3,300,\" one analyst said. (aly)<\/p>",
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