Matahari Says Lotte Is Among Four Retailers Interested in Buying Control

PT Matahari Putra Prima, Indonesia’s biggest retailer by market value, said four companies, including South Korea’s Lotte Shopping Co., are interested in acquiring a controlling stake. Matahari shares rose as much as 10 percent.

Bank of America Corp.’s Merrill Lynch unit is facilitating discussions with four retailers that may “explore the modes of investment” that may include a stake sale, Matahari said in an e-mailed statement. Its stock jumped 7 percent to 1,690 rupiah at the 11:30 a.m. trading break in Jakarta, headed for the highest close since it was listed December 1992.

A purchase would give the buyer control over the biggest rival to Carrefour SA in Southeast Asia’s largest economy, which is forecast to expand at least 6 percent this year. Matahari’s hypermarket business has annual sales of about $1 billion that will probably grow 22 percent this year, the statement said.

“More people tend to shop in convenient stores and the majority of Indonesia’s population are in their productive age, which is what attracts retailers,” said Betrand Raynaldi, an analyst at PT eTrading Securities in Jakarta. Matahari’s hypermarkets "own a large market share in Indonesia and their stores are strategically located," he said.

Wal-Mart, Casino

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.

Today’s gain boosts Matahari’s climb in Jakarta trading this year to 92 percent, giving it a market value of about $1 billion.

Matahari, which means "sun" in Indonesian, has 51 hypermarkets in Southeast Asia’s most populous nation, where domestic consumption accounts for two-thirds of the economy.

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 SA as the largest hypermarket operator in the Southeast Asian nation, the brokerage said.

Retail Network

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.

Matahari, founded in 1958, also has 25 supermarkets, 53 drug stores, 90 family entertainment centers and 18 book shops 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’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. Lotte Shopping fell 0.4 percent to 477,000 won in Seoul trading.

Binding Offer

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.

Anthony Rose, Vice President, Corporate Affairs of Wal-Mart Asia, said the company doesn’t comment on speculation. Dairy Farm declined to comment in an e-mail.

Casino was considering a binding offer for the food- retailing business of Matahari, 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).

Karine Allouis, a spokeswoman for Casino, and Florence Baranes-Cohen, a spokeswoman for Carrefour, couldn’t be reached for comment yesterday.

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 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.

To contact the reporter on this story: Greg Ahlstrand at gahlstrand@bloomberg.net; Widya Utami in Jakarta at wutami@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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