Heinz ties up with ABC in joint venture
Heinz ties up with ABC in joint venture
JAKARTA (JP): U.S. food giant H.J. Heinz Company announced on
Friday the formation of a joint venture with PT ABC Central Food
Industry, Indonesia's biggest producer of food sauce and drink
concentrate.
The Pittsburgh, Pennsylvania,-based company bought a majority
stake in ABC and renamed the joint venture PT Heinz ABC
Indonesia, it said in an announcement at Gran Melia Hotel.
Neither party was willing to disclose the value of the deal or
the percentage of the stake purchased, but ABC retains a
significant minority share.
"It is significant enough that Kogan Mandala (president of the
former ABC Central Food) will retain his chief executive
position...," Heinz representative Lowell Gruman, who will be a
director in the new company, told reporters.
Lowell said the investment decision was based on Heinz's long-
term view on the country and understanding that a 200-million
population was a critical market.
He also mentioned Indonesia as a possible production platform
for Heinz brands throughout the Asia Pacific.
"Let me assure you that this is not an opportunistic
transaction," he said, stressing Heinz was not taking advantage
of the crisis to buy shares cheaply.
He added the share valuation of ABC Food was based on the
company's excellent performance for a period of more than five
years, while flat growth in production over the last two years
was not a significant factor.
Kogan said ABC was not experiencing financial difficulties.
"The joint venture is not at all some type of restructuring."
Heinz's first contact with ABC came in 1995, and it endeavored
to show the Indonesian company it could be its best partner,
Lowell said.
"Then in 1997 the crisis hit. Heinz came to Indonesia and
(has) watched the whole economy for two years now. Many companies
have had a hard time but they survived, including ABC."
Kogan said ABC realized after much consideration that the
company could be strengthened by Heinz's sophisticated technical
support and international marketing skills.
ABC has a relatively small volume of exports, he said. "Heinz
will help us go global."
In addition to Jakarta, ABC has factories in Krawang, West
Java, and Surabaya, East Java. ABC's product lines include sweet
soy sauce, chili sauce, tomato ketchup and drink concentrate.
Lowell said there would be no layoffs of the 3,000 employees.
Heinz earned US$10 billion in revenue last year from about
5,000 food products, including the world's best selling tomato
ketchup.
Heinz has 50 affiliates in 200 countries, among them Japan,
South Korea, Thailand and China. (02)