Philip Morris wraps up Sampoerna deal

Philip Morris wraps up Sampoerna deal

Urip Hudiono, The Jakarta Post, Jakarta

U.S. tobacco giant Philip Morris has officially sealed its 98
percent control over Indonesia's second largest cigarette maker
by sales PT Hanjaya Mandala Sampoerna, with the completion on
Monday of a Rp 26.9 trillion (US$2.8 billion) payment for its
purchase of the shares.

The payment, which was made for Philip Morris' purchase of
57.5 percent of Sampoerna's shares from the investing public
through a tender on May 20, follows its previous acquisition in
mid-March of 40 percent of Sampoerna's shares -- including those
from the founding family -- worth some Rp 18.6 trillion.

"We have completed all of the payments for the shares as of
today, paying Rp 10,600 for each share," Sampoerna director Angky
Camaro told reporters, after a meeting with Minister of Finance
Jusuf Anwar.

"The payment was conducted through Bahana Securities, and all
of the funds were transferred here to the investors."

Angky, who along with Sampoerna's new president Martin King
had met the finance minister to introduce the company's new
management, further said that the government had welcomed the
completion of the deal.

"The government responded well to our report of the deal's
closure, particularly as all of the funds would remain in the
country," he said.

Philip Morris' $5 billion investment into Sampoerna was
expected to help lift the rupiah, which has recently been
slumping against the U.S. dollar.

Indeed, Philip Morris' release of greenbacks for the deal was
indicated as having balanced Monday's continuous strong dollar
demand in the local forex market, resulting in the rupiah
remaining flat at Rp 9,485 per dollar on Monday, unchanged from
last week's closing day of Friday.

Meanwhile, concerning the government's plan to raise retail
prices of cigarettes by up to 20 percent, Angky refused to
comment, but hinted Sampoerna's objection to the idea.

"If we were to choose, then we would prefer the government not
to raise the retail price," he said.

"Even if the price had to be raised, we hope it would not be
too much."

The finance minister said last week that the government was
planning to raise retail cigarette prices by between 15 and 20
percent in July, to increase state excise revenue as well as
discourage smoking.

Elsewhere, the finance ministry's director general for customs
and excise Eddy Abdurrachman dismissed objections from cigarette
makers, but admitted that the plan would need further study for
possible impacts on the country's tobacco industry.

"Many cigarette producers have accepted the plan, but they
still differ on the exact level of the raise," he said. "Some
don't mind a 20 percent increase, but others have said they would
prefer a 10 percent rise."

Eddy went on to say that the Coordinating Minister for the
Economy would discuss the plan further with stakeholders.

Nevertheless, word of the plan put a cloud over the local
stock market on Monday.

Share prices of the country's largest cigarette maker Gudang
Garam fell Rp 800 to Rp 12,650, while Sampoerna's shares also
slipped Rp 100 to Rp 8,100.