Philip Morris International is acquiring a 40% stake in Indonesian kretek cigarette manufacturer, Sampoerna, from a number of Sampoerna’s principal shareholders.
It will proceed to make a public tender offer for 100% of the remaining shares at a price per share of Rp. 10,600 (USD $1.13 per share), a premium of 20% over the price of Rp. 8,850 (USD $0.95) on Thursday March 10, 2005.
Assuming that all shares are tendered, the transaction values Sampoerna at approximately Rp. 48 trillion (USD $5.2 billion) including net debt of approximately Rp. 1.5 trillion (USD $160 million). PMI said that it will pay cash for all shares tendered and expects the transaction, when completed, to be modestly accretive in 2005 to the diluted earnings per share of Altria Group, Inc. The transaction will be debt financed through a bank credit facility arranged for PMI and its subsidiaries. The tender offer is expected to be completed within approximately 90 days and is subject to customary regulatory review.
Sampoerna is Indonesia’s third-largest tobacco company, with estimated domestic tobacco volume of 41 billion units in 2004, generating net revenues of approximately Rp. 9.0 trillion (USD $1.0 billion). Its operating income was estimated at approximately Rp. 3.1 trillion (USD $360 million) in 2004, up 19.5% versus the prior year. Sampoerna has strong kretek cigarette brands, including Dji Sam Soe and A Mild, and held a 19.4% share of the market in 2004. Its shares are listed in Indonesia on the Jakarta and Surabaya exchanges. Kreteks are cigarettes made with tobacco and cloves, and represent 92% of the total Indonesian cigarette market, which is estimated at more than 200 billion units annually.
“Our investment in Sampoerna is a great opportunity to significantly expand our business in the world’s fifth-largest, and growing cigarette market,” said Andre Calantzopoulos, President and Chief Executive Officer of PMI. “Today’s announcement reflects our confidence in the economic future of Indonesia and its tobacco industry, and positions us for profitable future growth by partnering with a well-managed and successful company that has an outstanding distribution and manufacturing infrastructure.”
“This is an excellent development for our shareholders and employees,” said Putera Sampoerna, President Commissioner of Sampoerna. “PMI is well known as a successful and responsible manufacturer and marketer of quality tobacco products.”
“We look forward to working with the employees of Sampoerna and are especially pleased that Putera Sampoerna has agreed to serve as special advisor to the board through the integration period and beyond,” said Matteo Pellegrini, President for the Asia Pacific region of PMI. “The action we are taking today reflects our decision to enter the large and profitable kretek cigarette segment in Indonesia. We intend to further invest in Sampoerna’s infrastructure and will continue to build the brand equity of its strong and well-established brands. We have the highest regard for Sampoerna, its employees and its strong heritage.”
Murdok | Breaking eBusiness News
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