INDONESIA – PT Indofood CBP Sukses Makmur, an Indonesian consumer branded products company, is planning to acquire Pinehill Company Limited, a producer of instant noodles in Africa and the Middle East for US$3 billion to expand in fast-growing markets for consumer products.
Indofood CBP, part of conglomerate Indofood Sukses Makmur, will acquire 100% of Pinehill Co. from Pinehill Corpora Ltd., an affiliated party of Indofood CBP, and Steele Lake Ltd.
Indofood entered into the agreement to acquire the company in May this year. According to a report by Bloomberg, the Indonesian firm said on Monday that it will hold a shareholders’ meeting on July 15 for the proposed transaction.
Pinehill Group manufactures and sells instant noodles, with its key markets being Saudi Arabia, Nigeria, Egypt, Turkey, Serbia, Ghana, Morocco and Kenya. The company has 12 factories with a production capacity of approximately 10 billion packs.
Indofood CBP revealed that it will pay US$1.53 billion to Pinehill Corpora for its 51% stake and US$1.47 billion to Steele Lake for its 49% stake, which the company plans to fund through through a mix of internal resources of US$300 million and third-party bank borrowings.
Under the terms of the deal, Pinehill Co. and Steele Lake are guaranteeing US$128.5 million in consolidated group net income through December 2021. However, Indofood CBP noted that the acquisition value may be adjusted if the sellers fail to meet the profit guarantee within a 5% deviation.
The company expects the transaction to close within five days days after all of the conditions precedent are fulfilled or waived.
Upon closing of the acquisition, Indofood, which dominates the instant noodles market in Southeast Asia’s largest economy, expects to gain a strategic position in Pinehill’s markets, where halal products are the primary choice.
The noodle producer noted that the proposed acquisition of Pinehill, whose main business is in the manufacturing and distribution of instant noodles in Africa, Middle East and South Eastern Europe, is directly in-line with the development and expansion of the its core business.
“The Proposed Acquisition is expected to enable the Company to become a global food player and food products manufacturer with a strong global market share in the instant noodles market,” Indofood said in a statement while announcing the deal in May.
Indofood CBP already has an annual production capacity of 19 billion packs of instant noodles, according to its 2019 annual report.
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