Jakarta firm of­fers to buy out $584m China Minzhong Food

China Daily (USA) - - BUSINESS -

A com­pany con­trolled by Indonesian bil­lion­aire An­thoni Salim of­fered to ac­quire the rest of China Minzhong Food Corp in a deal valu­ing the Chi­nese com­pany at S$786 mil­lion ($584 mil­lion).

The deal could help the ty­coon ex­er­cise greater con­trol over a food em­pire span­ning potato chips, in­stant noo­dles and cook­ing oil. Full own­er­ship of Minzhong Food could also make it eas­ier to sell it off.

Marvel­lous Glory Hold­ings Ltd of­fered S$1.20 in cash for each share in Minzhong Food, ac­cord­ing to a fil­ing in Sin­ga­pore, where Minzhong Food is listed.

That’s 25 per­cent more than the stock’s last clos­ing price. In­vestors can choose an al­ter­na­tive in the form of cash and ex­change­able bonds un­der terms in the of­fer. Shares of the Chi­nese veg­etable-pro­cess­ing com­pany jumped 17 per­cent to S$1.12 in Sin­ga­pore on Wed­nes­day.

The deal makes sense for Minzhong Food’s largest share­holder, Salim’s Ind­o­food Suk­ses Mak­mur, ac­cord­ing to Syai­ful Adrian, an an­a­lyst at Cip­tadana Seku­ri­tas. A buy­out would al­low Minzhong Food, which reported a third de­cline in an­nual profit for the year ended June 30, to be re­moved from Ind­o­food’s books.

“Minzhong Food has been weigh­ing on Ind­o­food,” Adrian said by tele­phone from Jakarta. “Ind­o­food could also use the pro­ceeds from the (pos­si­ble) sale (of Minzhong Food) to re­pay some of its for­eign-cur­rency debts and re­duce the ex­change-rate risk on the com­pany.”

Ind­o­food had to­tal for­eign­cur­rency debt of about $1.1 bil­lion as of June, or about half of its 28.6 tril­lion ru­piah ($2.2 bil­lion) in li­a­bil­i­ties, ac­cord­ing to the com­pany’s fi­nan­cial re­port.

Minzhong Food will be delisted if the Marvel­lous/Ind­o­food of­fer goes through, ac­cord­ing to the doc­u­ment.

Salim has a net worth of $3.3 bil­lion, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex. His First Pa­cific Co, through Jakarta-listed Ind­o­food, owns 82.88 per­cent of Minzhong Food. Salim has a com­bined di­rect and in­di­rect in­ter­est of about 45.11% in Hong Kong-listed First Pa­cific, the fil­ing dated Sept 6 showed.

The of­fer re­quires pre­con­di­tions to be met, in­clud­ing ap­proval from in­de­pen­dent share­hold­ers of Ind­o­food and First Pa­cific for the Jakartabased com­pany to sell its stake in Minzhong Food. Salim will be re­quired to ab­stain from vot­ing on the res­o­lu­tion, ac­cord­ing to the doc­u­ment.

The of­fer is also con­tin­gent on the ac­quirer gain­ing ac­cep­tances for shares car­ry­ing more than 50 per­cent of vot­ing rights, the doc­u­ment showed.

Minzhong Food said the pro­posal would al­low “greater con­trol and man­age­ment flex­i­bil­ity” in im­ple­ment­ing “strate­gic ini­tia­tives,” ac­cord­ing to the fil­ing.

A take­out of Minzhong Food would add to more than a dozen delist­ings an­nounced in Sin­ga­pore with a com­bined mar­ket value of S$4.5 bil­lion in the first half of 2016 alone, ac­cord­ing to data com­piled by Bloomberg.

“Val­u­a­tions have been beaten down so there is a lot of in­cen­tive to take them pri­vate,” said Jeremy Teong, an an­a­lyst at Phillip Se­cu­ri­ties in Sin­ga­pore.

Val­u­a­tions have been beaten down so there is a lot of in­cen­tive to take them pri­vate.” Jeremy Teong, an an­a­lyst at Phillip Se­cu­ri­ties in Sin­ga­pore

An­thoni Salim, chief ex­ec­u­tive of­fi­cer of PT Ind­o­food CBP Suk­ses Mak­mur Tbk.

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