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.