Indofood cancels Golden Agri deal, mulls replacement

Indofood cancels Golden Agri deal, mulls replacement

JAKARTA (JP): Publicly listed giant food producer PT Indofood
Sukses Makmur said on Saturday it had canceled the acquisition of
the Sinar Mas Group-owned oil palm firm PT Golden Agri Resources,
intensifying speculation that Indofood may acquire PT Astra Agro
Lestari instead.

Indofood president Eva Riyanti Hutapea said Golden Agri had
failed to fully meet certain conditions of the acquisition deal
by its Aug. 10 deadline.

She did not rule out the possibility of seeking a replacement
for the failed acquisition of Golden Agri.

"The decision to discontinue the planned acquisition of GAR
(Golden Agri Resources) does not change Indofood's intention to
continue to explore investment or management participation when
the right opportunities arise," Eva said.

In May, Indofood and Golden Agri signed a preliminary deal to
acquire the latter's stake of up to 55 percent for around $173
million.

The Singapore-listed Golden Agri is a unit of the Sinar Mas
Group's Asia Food Property (AFP).

Some had questioned the feasibility of the deal given Golden
Agri's huge foreign debts of some $400 million.

There were also concerns over the company's link to the Sinar
Mas Group, whose unit Asia Pulp & Paper (APP) defaulted on debts
of over $12 billion.

Eva did not elaborate on the reasons Golden Agri failed to
meet the agreement conditions on time.

But she said earlier that missing data was stalling a due
diligence on Golden Agri, without which the deal would be void.

Even while Indofood was awaiting Golden Agri's due diligence,
talks surfaced that the company was looking to replace Golden
Agri.

The strongest candidate is publicly listed Agro Lestari, a
subsidiary of the widely diversified PT Astra International.

Astra officials have said the company was in informal talks
with Indofood regarding Agro Lestari's acquisition.

Thus far, Indofood remains silent over the rumors, saying only
that it would look into Agro Lestari should Astra make an offer.

Divesting its palm plantation unit would help Astra pay off
its massive foreign debts.

And Indofood has been long trying to boost revenue from its
agribusiness division, which Eva said "provides significant
profit contribution to the company".

Both companies tried to play down the other side's importance
for meeting their goals -- a further indication that they were
serious.

Astra revealed that more than one buyer had showed interest in
Agro Lestari, while Indofood said it was looking at several other
palm plantation firms.

Elsewhere, Indofood said its first half net profit rose to Rp
352.7 billion (about $38.75 million), or up 23 percent from last
year's first half net profit.

The company attributed the increase to lower foreign exchange
losses, with foreign debts as of June 30, 2001 dropping to $448
million from $680 million in the same period last year.

First half net sales rose by 23 percent to hit Rp 7.15
trillion on a combination of higher prices and sales volume.

But an increase in expenses, among others from higher fuel and
power prices, as well as a weaker rupiah, weakened Indofood's
gross margin to 26 percent against 31 percent the year
before.(bkm)