Salim's QAF deal puzzling: Analysts

Salim's QAF deal puzzling: Analysts

SINGAPORE (Reuter): Analysts and brokers said they were
puzzled by the share option taken by the Salim group of Indonesia
that would oblige it to make a takeover offer for Singapore-based
food group QAF Ltd -- a company it already manages.

Salim's privately-held KMP Pte Ltd said in a weekend statement
it had agreed with the Swiss Bank Corporation (SBC) on options to
buy 25 million QAF shares at Singapore $1.93 each and 2.5 million
QAF warrants at S$1.02 each.

The options may be exercised up to July 15.

KMP already owns 24.77 percent of QAF, just shy of the 25
percent takeover trigger point under Singapore takeover laws. It
also owns 8.95 million QAF warrants.

Exercising the option would take KMP's stake in QAF to 103.3
million shares, or 32.68 percent, and require it to make a
general takeover offer for all outstanding QAF shares at S$2.00 a
share and $$1.10 for all outstanding warrants.

"There is no good reason for Salim to go into this deal. It
already is the largest shareholder of the company and also has
management control," said the managing director of a local
brokerage.

KMP managing director Tan Kong King is also on the QAF board.

"If Salim wanted to mount a takeover for QAF, why didn't he
just buy the shares outright instead of going for this option
deal?" said another analyst.

Gregory Yap, investment analyst with J.M. Sassoon, said the
deal was "devoid of facts and puzzling" given that KMP has not
shed any light on its move.

"There are two possibilities. One its that the Salim group
wants to fend off any possible hostile takeovers from a third
party. The other is that Salim wants to maintain total control
just in case he has big plans for the company," he said.

Yap also said the takeover price of S$2 a share was expensive,
pricing QAF at 34 times its 1996 earnings.

"Fundamentally, there is very little upside for the company,"
he said.

KMP officials declined to add to what the company said in its
weekend statement.