Astra may up stake in Astra Agro

Astra may up stake in Astra Agro

Bloomberg, Jakarta

PT Astra International, Indonesia's biggest auto company, plans to raise its stake in PT Astra Agro Lestari by buying 7 percent of the company from businessman Edwin Soeryadjaya at a 70 percent premium, to honor a commitment agreed to in 1995, President Budi Setiadharma said.

PT Pandu Dian Pertiwi, Soeryadjaya's company, and Astra International agreed in 1995 that Pandu Dian could sell 103 million shares of Astra Agro to Astra International at a price of US$50 million, according to Astra International's audited 2000 financial report. According to filings at the end of last year, Pandu Dian has a 0.16 percent stake in Astra Agro.

The price, equivalent to Rp 4,200 a share, amounts to a 70 percent premium over Astra Agro's Rp 2,475 price at today's close.

"For Astra International, it's bad. Why should you buy a share for over Rp 4,000 if you can buy at Rp 2,400," said Erwan Teguh, an analyst at PT Danareksa Sekuritas. "But they have no choice, they have to honor the agreement."

Astra International said it plans to buy the shares. In 2000, after Pandu Dian said it wanted to exercise its option, Astra signed an agreement allowing it to defer the purchase to as late as June 15 this year by paying an annual penalty.

"Astra is willing to buy Edwin's 7 percent stake in Astra Agro before June 15," Budi said last night. "This depends on whether Edwin meets all the requirements. He has pledged the stake to Citibank." Budi didn't specify the requirements. The Soeryadjaya family founded Astra International.

Astra Agro's shares jumped 4 percent to Rp 2,475. Astra International rose 1.7 percent to Rp 6,050.

"As Pandu Dian has only a 0.16 percent stake in Astra Agro, there was speculation that Pandu may buy from the market and sell it to Astra," Teguh said.

At the end of March, Jakarta-based Astra International, Indonesia's sixth-biggest company by market value, had a 63 percent stake in Astra Agro. Citibank Ltd.'s Jakarta branch had 6.7 percent of Astra Agro, according to an April 6 report by registrar PT Raya Saham Registra to the Jakarta Stock Exchange.

Astra International said it will gain from the purchase in the long term, as contributions from the unit will rise, in line with increasing palm oil prices.

Jakarta-based Astra Agro, Indonesia's biggest publicly traded agricultural company, posted a 22 percent increase in profit last year to Rp 280.7 billion ($32 million), helped by a 15 percent increase in palm oil prices.

Astra Agro shares have surged 43 percent this year, outperforming the benchmark Jakarta Composite Index's 16 percent gain and Astra International's 21 percent rise.

"Although Astra Agro's current price is relatively expensive, the company has good prospects," Budi said in Jakarta.