First Pacicif, Indofood deal at risk

First Pacicif, Indofood deal at risk

HONG KONG (Reuters): An attractive source of diversification could slip away from First Pacific Co Ltd if a deal to buy a stake in Indonesia's PT Indofood Sukses Makmur fails to go through, analysts said on Tuesday.

The transaction was due to be completed on February 1 but First Pacific said on Monday there were several unfulfilled closing conditions and other unresolved matters concerning Indofood creditors.

"The unfulfilled conditions include obtaining certain third party consents and approvals, to the satisfaction of the parties to the Stock Purchase Agreement," First Pacific said.

"If these issues are not resolved, the parties to the stock purchase agreement may either waive the relevant conditions or terminate the agreement," the company said in a statement.

Indofood said last month the deal was awaiting approval from its creditors.

"Of course, we would like to see the deal completed as soon as possible," a First Pacific spokeswoman said on Tuesday.

"Currently, we do not have a timetable for that. Both parties are still in discussions."

The acquisition would involve the joint purchase by First Pacific and Nissin Food Products Co of a 60 percent stake in Indofood from the Salim family and associated investors.

Indonesian conglomerate Salim Group said on Tuesday the decision on whether or not First Pacific went ahead with its planned purchase remained in First Pacific's hands.

An aide to Salim's executive director Benny Santoso said the matter was the concern of First Pacific, since the Hong Kong firm had suggested it, not Salim group.

"This is their concern. In this case Salim has no comment," the aide told Reuters after consulting with Benny.

Salim Group controls both First Pacific and Indofood.

Analysts said if the deal failed to go through, it would have a negative impact on First Pacific's long-term earnings prospects and its share price, which was already reflecting an acquisition.

"It will provide a long-term earnings growth story," said Lachlan Christie, an analyst at South China Research.

"If First Pacific does not have something like Indofood, then it does not have any long term prospects."

Chiu Man Wai, an analyst at BNP Prime Peregrine, said the deal was just being delayed and First Pacific still had plenty of time to complete the acquisition.

"The Indofood deal is a good deal because the price tag is inexpensive and Indofood itself is generating positive cash flow," Chiu added.