U.S. firm owns 97% stake in Sampoerna

U.S. firm owns 97% stake in Sampoerna

Leony Aurora, The Jakarta Post, Jakarta

U.S. cigarette giant Philip Morris now controls 97 percent of the
country's second largest cigarette maker PT Hanjaya Mandala
Sampoerna and has appointed Martin King as the new president,
replacing Michael Joseph Sampoerna.

As of business closing on Tuesday, approximately 57 percent of
shares were irrevocably tendered at Rp 10,600 (US$1.13) per
share, the two companies said in a joint statement released after
an extraordinary general meeting of shareholders on Wednesday.

"However, we have no plans to take the company off the Jakarta
stock market," said Philip Morris Asia Pacific President Matteo
Pellegrini.

Pellegrini was appointed by the meeting as president
commissioner of Sampoerna to replace the founder's grandson
Putera Sampoerna, who will remain as an advisor to the company
throughout the transition period.

The meeting appointed Martin King, formerly managing director
for Philip Morris' China unit, to lead the company and retains
Angky Camaro, Edward Frankel and Sugiarta Gandasaputra as
directors, as well as two commissioners.

It adds Salman Hameed, Arndt Kottsieper and Andrew White to
the board of directors.

King is upbeat that the new management, combining Sampoerna's
market knowledge and Philip Morris' worldwide experience, will
bring about greater growth, but said that it would not make
sweeping changes.

"Sampoerna is very successful. You don't come and change it
right away," he said.

In a surprise move in mid-March, Philip Morris through its
local unit Philip Morris Indonesia acquired 40 percent of
Sampoerna's shares, including those of the founding family, for
Rp 18.6 trillion, or Rp 10,600 per share.

With the acquisition of the second largest clove cigarette
maker in Indonesia, Philip Morris, which produces Marlboro
cigarettes, aims to gain a larger market in the country.

Some 92 percent of the estimated 141 million smokers in
Indonesia smoke clove cigarettes.

"We envision becoming the country's number one producer of
cigarettes," said Pellegrini. Combined, Sampoerna and Philip
Morris control a 25 percent market share in Indonesia.

Sampoerna was founded in 1913 by Lim Seeng Tee, who used to
peddle his bike through the streets of Surabaya to sell his hand-
rolled cigarettes.

Since then the company has grown to an astounding size,
selling over 42 billion cigarettes in 2004 with premium brands
such as Dji Sam Soe and A Mild.

Gudang Garam, which sold some 64.7 billion cigarettes last
year, is Sampoerna's toughest competitor. Djarum is the third
largest producer with some 39 billion cigarettes sold in 2004.
Unlike Sampoerna, both companies have products for the lower end
market segment.

Analysts have estimated that the country's cigarette industry
will grow by 5 percent in terms of sales volume this year.

Sampoerna's Board of Commissioners:

President Commissioner: Matteo Pellegrini

Vice President Commissioner: Michael Murphy

Commissioner: Douglas Werth

Commissioner: Ekadharmajanto Kasih

Commissioner: Phang Cheow Hock

Sampoerna's Board of Directors

President Director: Martin King

Director: Salman Hameed

Director: Arndt Kottsieper

Director: Andrew White

Director: Angky Camaro

Director: Edward Frankel

Director: Sugiarta Gandasaputra