Sampoerna cancels Astra take over plan
JAKARTA (JP): PT Handjaja Mandala (HM) Sampoerna, one of the country's largest cigarette manufacturers, has canceled its US$500 million plan to buy a 25 percent stake in PT Astra International because its minority shareholders disapproved, according to a report from Sampoerna.
The company notified the Capital Market Supervisory Agency (Bapepam) on Oct. 29 that it had planned a tender offer to buy a large stake in Astra.
A capital market regulation stipulates that investors must follow tender-offer procedures if they want to buy 25 percent or more of a listed company's shares, or a 20 percent stake in a listed company with the intention of controlling it.
Tender-offer procedures require investors to publish their intentions in newspapers and buy shares within 90 days of their announcement.
Based on the report, Sampoerna had considered buying 25 percent of Astra's shares, assuming it would spend $500 million buying approximately 290 million shares for around Rp 4,000 each. If the plan had succeeded, Sampoerna would have become the largest shareholder in Astra.
Sampoerna said it had expected its shareholders to approve the tender-offer plan and several related proposals at an extraordinary meeting of shareholders scheduled for Nov. 2.
The meeting was canceled when the company gave up the tender- offer.
The report said that Sampoerna's management and founding shareholders had proposed a rights issue worth $300 million to finance the take over plan. It said it intended to get the other $200 million from bank loans.
"We had a $400 million loan facility to meet the proposed tender-offer requirements," Sampoerna director Ekadharmajanto Kasih was quoted in the report as saying.
"But in a series of intensive talks with minority shareholders, fund managers, stock analysts and international rating agency's analysts, we found we did not have enough support for our plan even though the company's founders had given their approval."
"We had hoped to gain approval from more than 50 percent of shareholders because the founders own more than 50 percent of the shares in Sampoerna. But the founders preferred not to use their voting power," Ekadharmajanto said.
Since early October, there have been rumors on Sampoerna's take over bid, even though the company announced late September it had only bought a 2.85 percent stake in Astra through its fully-owned subsidiary Sampoerna Investment Corporation.
The company's move on Astra was received badly by many investors who doubted the company's ability to diversify into a completely new business sector.
Sampoerna's price dropped to a low of Rp 18,725 (US$7.98) early this month but the price has slowly recovered, closing at Rp 21,000 yesterday.
Ekadharmajanto said the extraordinary meeting's cancellation has helped raise Sampoerna share prices on the Jakarta Stock Exchange.
"Based on our observations on share performances, we have concluded that our decision is welcomed by investors," he said.
Ekadharmajanto confirmed that Sampoerna Investment Corporation's 2.85 percent stake in Astra was sold on Oct. 22 through the Surabaya Stock Exchange. (alo)