Indofood will acquire Bogasari from Indocement

Indofood will acquire Bogasari from Indocement

JAKARTA (JP): The well-diversified Salim Group plans an
internal acquisition through the transferal of PT Bogasari Flour
Mill's assets from PT Indocement Tunggal Prakarsa to its food
division, PT Indofood Sukses Makmur.

Directors of Indocement and Indofood told a joint press
conference here yesterday that the acquisition plan is still
subject to the approval of the government and the minority
shareholders.

Indofood is 50.1 percent owned by Indocement. Both companies,
which are controlled by the Salim Group, are listed on the
Jakarta and Surabaya Stock Exchanges. Public shares account for
2.1 percent in Indofood and 10 percent in Indocement.

When asked, the directors refused to state the value of the
planned acquisition, saying that could be announced after it is
approved by the authorities and minority shareholders.

"An independent appraiser is still accessing the value of
Bogasari's assets and liabilities. What I can assure is that the
price settled on will be deemed fair by both parties," said Eva
Riyanti Hutapea of Indofood.

Indocement acquired Bogasari in 1992 at US$414.6 million.

Eva noted that Indofood will explore fund-raising measures,
including debt accruing and equity improvement, to finance the
acquisition. "We consider issuing right shares as one possibility
to raise funds," she added.

Monopoly

She said the planned acquisition of Bogasari, which
practically holds a monopoly in wheat milling domestically, will
enhance Indofood's standing as the largest integrated food
manufacturer in the country.

Indofood, which owns and operates 22 food processing plants in
various provinces, claims to hold a 90 percent market share for
instant noodles in Indonesia, about 60 percent for both snack and
baby foods and another 50 percent for coffee and other products.

The company recorded a 190 percent increase in its after-tax
profit to Rp 145.6 billion during the January-September period of
last year over the corresponding period of 1993.

Eva disclosed that the company's unaudited after-tax profit
for last year soared to Rp 220 billion. "For this year, we
initially expect to get some Rp 300 billion in after-tax profit,
but because of the acquisition," she added.

Sudwikatmono of Indocement specified that Bogasari's milling
plants in Jakarta and Surabaya, East Java, have a combined
production capacity of 2.5 million tons of flour per annum. Its
capacity is projected to increase by 40 percent by the year 2000.

Bogasari also controls the management of a flour milling plant
owned by PT Berdikari Sari Flour Mill in Ujungpandang, South
Sulawesi, with an annual production capacity of 800,000 tons.

Sudwikatmono denied allegations that Bogasari monopolizes
flour milling in the country, saying that since 1993 the
government has allowed other private companies to set up flour
milling plants.

The government has approved the construction of three new
flour milling plants in Medan, North Sumatra; Semarang, Central
Java, and Cibinong, West Java. "However, I never heard whether
they have started the construction of their projects,"
Sudwikatmono said.

Bogasari gets wheat from the National Logistics Agency, which
monopolizes the importation and distribution of wheat and other
agricultural products. Bogasari pays the agency after its
products are marketed.

Sudwikatmono said Bogasari currently owes Rp 94 billion ($42.7
million) to the logistics agency in the form of wheat stocks.

He noted that the sale of Bogasari's assets will give
Indocement fresh money for paying its debts and for financing its
planned expansion program and the major modification of its
cement plants.

"The sale of Bogasari to Indofood will allow Indocement to
have a business structure that is more focused on its core
business -- cement manufacturing," Sudwikatmono said.

Indocement, the country's largest cement producer, plans to
increase its annual production capacity from 9.4 million tons at
present, almost 50 percent of the country's total output, to 14.5
million tons by the end of 1997.

Sudwikatmono predicted that the annual cement crises will
occur until 1997, when the expansion projects of a number of
leading cement factories are expected to reach completion.

Benny S. Santoso, the executive director of Indocement, noted
that its unaudited after-tax profit reached Rp 360 billion last
year, of which Rp 95 billion was contributed by Bogasari.
Indocement's 1993 profit was recorded at Rp 312.4 billion. (rid)