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Wed, Jan 27, 2010 - Page 10 News List

US group to buy out Indonesian retailer


US-based global equities group CVC Capital Partners has agreed to take over Indonesia’s biggest department store chain for US$765 million, local media reports said yesterday.

Market analysts welcomed the deal as a sign of badly needed interest from foreign investors in Southeast Asia’s biggest economy, which has been plagued by rampant corruption, crumbling infrastructure and legal uncertainty.

Under the deal, CVC Capital Partners will acquire 90.76 percent of Matahari Department Store (MDS) for 7.2 trillion rupiah (US$765 million) from parent company PT Matahari Putra Prima.

A joint venture called Meadow Asia Company Ltd will be 80 percent owned by CVC Capital Partners and 20 percent by Matahari Putra Prima, which in turn is majority owned by the Lippo Group of controversial tycoon James Riady. The deal announced on Monday must be approved by Matahari shareholders within 40 days.

“This strategic alliance will support ­Matahari’s future growth and continued expansion,” Matahari Putra Prima said in a statement on its Web site. “It also demonstrates strong foreign investor confidence in Indonesia and contributes significantly to the growth of the domestic economy.”

Matahari Putra Prima operates dozens of department stores, hypermarkets, supermarkets, pharmacies, entertainment centers and bookstores in more than 50 cities across Indonesia.

It said the sale would help MDS dominate the Indonesian retail market and open more than 150 new stores over the next 10 to 15 years.

The agreement valued MDS at 2,705 rupiah per share. The stock closed up 24 percent on Monday at 1,680 rupiah in moderate volume.

“The deal indicates that foreign investors have confidence in Indonesia … There may be corruption problems but the country is working towards making improvements,” Sucorinvest Central Gani equity analyst Gifar Indra Sakti said.

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