Salim Group shifts Indofood to S'pore

Salim Group shifts Indofood to S'pore

SINGAPORE (Reuter): Indonesia's Salim Group unveiled plans
yesterday to inject its flagship PT Indofood Sukses Makmur into
Singapore's QAF Ltd in one of the largest takeovers in Singapore
corporate history.

Bread maker QAF, 70 percent controlled by Salim, agreed with
Anthony Salim and PT Sumber Sampoerna Nusantara to buy a majority
stake in Indofood for about 4.68 trillion rupiah (S$2.75 billion)
in cash.

QAF, which has a market capitalisation of only S$568 million,
plans to finance the acquisition through a massive rights issue
raising S$2 billion to S$2.2 billion and the balance through bank
borrowings.

Analysts said they were surprised by the size of the asset
injection by the Salim Group into QAF and some were also worried
about the cost of the acquisition.

"There were market rumors about an asset injection but we
didn't expect it to be so sizable," said Cheong Kok Wing,
investment analyst with Merrill Lynch.

On completion of the deal, QAF will have an effective interest
equivalent to about 50.1 percent of Indofood, which is
Indonesia's largest listed food company with a market
capitalisation of about S$6 billion.

"The size of the deal is huge and complex...We are quite sure
the acquisition makes good sense for QAF," Tan Kong King, group
managing director of QAF told a news conference called to
announce the deal.

Indofood is the world's largest maker of instant noodles and
has interests ranging from flour milling to edible oils. Net
sales rose 35 percent to S$1.7 billion and net profit rose 15
percent to S$206 million in 1996.

Tan, who also sits on the board of a number of privately held
Singapore companies owned by the Salim Group, said QAF would not
just be a holding company for Indofood.

"QAF will not just be the shadow of Indofood although
initially its income will be substantially the same as Indofood,"
he said.

"Our intention is to grow QAF into a truly multinational
company," he added.

He said the Salim Group had indicated it would give QAF an
option to participate in its food businesses, comprising several
noodle plants and flour mills in China.

The Salim Group has also brought Indonesian tobacco tycoon
Sampoerna into the QAF deal.

Tan said Salim's stake in QAF would be reduced to 66 percent
as it plans to sell 10 percent of the company to the Sampoerna
family. He said the price of the stake has not been determined.

In addition, QAF will enter into a joint venture with
Sampoerna International Ltd, owned by PT HM Sampoerna, to acquire
suitable food businesses in the region.
However, Tan ruled out any tobacco businesses for QAF.

On concerns about the financial impact on QAF after the
acquisition, Tan said: "The cash flow of QAF plus the dividend
from Indofood will be more than enough to service interest and
dividend of QAF."