Matahari Says Four Retailers Interested in Acquiring Control

PT Matahari Putra Prima, Indonesia’s second-biggest hypermarket operator by stores, said four retailers, including South Korea’s biggest, are interested in acquiring a controlling stake. Matahari shares rose 9.5 percent. 

Bank of America Corp.’s Merrill Lynch unit is facilitating discussions with the companies that may “explore the modes of investment” that may include a stake sale, Matahari said in an e-mailed statement. Matahari jumped 150 rupiah to 1,730 rupiah as of 9:36 a.m. Jakarta time, set for the highest close since its trading debut December 1992. 

South Korea’s Lotte Shopping Co. is one of the four retailers that may invest in Matahari, according to the statement, which didn’t identify the other three suitors. Wal- Mart Stores Inc. and French retailer Casino Guichard- Perrachon SA are among the companies that have looked at the assets, people familiar with the deal said last month. 

A purchase would give the buyer control over Matahari’s 51 hypermarkets, 25 supermarkets and 53 pharmacy outlets operating in an economy forecast to expand 6 percent this year. The hypermarket business has annual sales of about $1 billion that will probably grow 22 percent this year, the statement said. Domestic consumption accounts for about two- thirds of the Indonesian economy, the biggest in Southeast Asia. 

Today’s gain boosts Matahari’s climb in Jakarta trading this year to 97 percent, giving it a market value of about $1 billion. 

Expansion Plans

The retailer, founded in 1958, also has 90 family entertainment centers and 18 bookstores as well as a strategic alliance operating 92 department stores in more than 50 cities across Indonesia, according to its statement. 

It plans to open at least 13 hypermarkets next year and 80 outlets over the next five years, Matahari said. 

The possible investors “highlighted potential for enhancing and expanding the food business with all non-related assets and liabilities being excluded,” Matahari said. 

Lotte Group, the parent of Lotte Shopping, has 21 outlets, Tong Yang Securities Inc. said in a Nov. 4 report. Acquiring a controlling stake or just the stores would let the South Korean company overtake Carrefour as the largest hypermarket operator in the Southeast Asian nation, the brokerage said. 

Carrefour, the world’s second-biggest retailer, in June opened its 64th hypermarket in Indonesia where it also has at least 16 supermarkets, according to its website. The French retailer, which entered Asia in 1989 with a hypermarket in Taiwan, opened its first store in Jakarta in 1998. 

Carlyle, Dairy Farm

Lotte’s Hwang Kag Gyu, executive vice president of international and new business planning, said Nov. 30 it will make a final offer for Matahari’s hypermarkets. The deadline for final bids is likely to be delayed from an original schedule of early December, he said. 

Carlyle Group and Hong Kong’s Dairy Farm International Holdings Ltd. had also looked at the Indonesian retailer’s assets, three people familiar with the process said last month. 

Lotte Shopping, which said Nov. 12 it had submitted a letter of intent to buy Matahari’s hypermarket business, has spent about $1.5 billion on four acquisitions this year, according to Bloomberg data. 

Units of Seoul-based Lotte, whose assets include petrochemical operations, are expanding in China, Vietnam, Indonesia and Russia to tap faster growth and rising affluence in developing markets. 

Lotte Expansion

Lotte Group seeks acquisitions in China and Southeast Asia as sales overseas in the next decade are likely to expand two to three times faster than in its domestic market, said Hwang, who spends about a third of his time abroad. 

Matahari said in October it hired Merrill Lynch to analyze its business and follow up on interest by companies outside Indonesia for an investment or partnership. The company sold control of its department-store arm to a unit of CVC Capital Partners Ltd. for 7.2 trillion rupiah ($798 million) in January. 

Casino and Lotte were considering a binding offer for the food-retailing business of Matahari after proceeding to the second round of the auction, two people with knowledge of the deal said last month. 

Casino last month agreed to buy Carrefour’s business in Thailand for 868 million euros ($1.14 billion).Source: Bloomberg