Indofood mulling purchase of oil palm plantations' satkes

JAKARTA (JP): Giant consumer products manufacturer PT Indofood Sukses Makmur Tbk is considering buying stakes in several oil palm plantations to secure supplies of crude palm oil for its instant noodle business.

"We are exploring ways to buy a stake in plantation companies that are of a similar size to the ones Salim (Group) sold to (Malaysia's Kumpulan) Guthrie," Indofood's president Eva Riyanti Hutapea was quoted as saying by the Dow Jones newswire.

Guthrie has agreed to buy 180,000 hectares of oil palm plantations in a deal worth US$350 million. The plantations are one of the assets taken over from the Salim Group by the government to cover the former's debt.

Indofood is eying stakes in PT Astra Argo Lestari, which is a unit of automaker PT Astra International; PT Bakrie Sumatra Plantation, a unit of PT Bakrie & Brothers; and state-owned PT Socfindo Indonesia.

Eva noted, however, that Indofood has yet to decide which company it will take over.

"We are still looking for the one that best suits Indofood's interests," she said.

Eva said the acquisition plan was a vital part of Indofood's corporate plan to achieve greater control of the supply of crude palm oil used to make noodles and produce edible oils.

Indofood announced last week the cancellation of its plan to acquire PT Golden Agri Resources, an oil palm plantation company owned by the Sinar Mas Group, following its failure to complete an audit of the company due to incomplete financial records.

Since then, there has been speculation about alternative plantations Indofood is considering.

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

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

Meanwhile, Indofood has long been trying to boost revenue from its agribusiness division, which Eva says "provides a significant profit contribution to the company". (tnt)