SINGAPORE/JAKARTA: Indonesia's Matahari Putra Prima said on Monday, Jan 10 it will retain its hypermarket business as a wholly owned entity, effectively scrapping a $1 billion sale plan, but will look for a global partner to expand the business.
The decision to retain the unit comes after two rounds of bidding for Matahari's hypermart business, Indonesia's second largest, which sources had said was aimed at raising $1 billion.
The deal had generated interest from South Korea's Lotte Shopping , French retailer Casino Guichard Perrachon SA , and Wal-Mart , the world's largest retailer.
"One of the main reasons for Matahari to drop the sale is that the bidding price was lower than they expected," said Ikhsan Binarto, an analyst at Indopremier Securities in Jakarta. "But the statement could also be an effort by the Lippo Group to get a better price by playing hard to get," he added.
International retailers are jockeying for position in emerging markets as they look for sources of growth outside maturing U.S. and European markets, although the cost of competing is often too much to justify widespread expansion.
A source close to the deal told Reuters that the bids for Matahari's hypermart business were below the company's expectations. The source declined to be identified because the information was not public.
The sale process had been widely watched, coming hard on the heels of a decision by French retailer Carrefour to sell its Thai assets to Casino for $1.2 billion.
Indonesia has become a hot destination for foreign investors because of its rapidly growing economy that is generating interest in consumer-driven sectors such as retail and banks.
Indonesia's benchmark index soared 46 percent last year, making it one of Asia's best performing stock markets.
Matahari, a retailer controlled by one of Indonesia's biggest conglomerates, Lippo Group, said last month that four companies were interested in investing in the company as majority shareholders and becoming a partner to expand the hypermarket business. [ID:nL3E6N21BR]
Matahari shares tumbled 7.8 percent on Monday, greater than the 4 percent fall on the broader stock market.
PRIZED ASSET
Hypermart was Indonesia's second-biggest hypermart chain after PT Carrefour Indonesia, with 52 outlets in the world's fourth most populous nation, generating an annual revenue of $1 billion.
Following a strategic review by Bank of America's Merrill Lynch, Matahari also said on Monday that it plans to sell non-core, non-food retailing assets.
"We would like to bring in a strong global partner and are determined to retain and grow our Hypermart business and to streamline other non-core operations," Benjamin Mailool, president director of Matahari Putra Prima said in a statement.
"We welcome the interests of global players to invest or acquire a substantial interest in Matahari Putra Prima. But it is important to note at this moment that there is no assurance that any of the plans will materialize," he added.
On Friday, a source said Lotte Shopping entered the second round of bidding to buy Hypermart. [ID:nTOE70607D]
Sources had also said France's Casino had also been expected to submit a second-round bid. Lotte Shopping declined to comment on Monday, while Casino was not immediately available for comment. - Reuters
The decision to retain the unit comes after two rounds of bidding for Matahari's hypermart business, Indonesia's second largest, which sources had said was aimed at raising $1 billion.
The deal had generated interest from South Korea's Lotte Shopping , French retailer Casino Guichard Perrachon SA , and Wal-Mart , the world's largest retailer.
"One of the main reasons for Matahari to drop the sale is that the bidding price was lower than they expected," said Ikhsan Binarto, an analyst at Indopremier Securities in Jakarta. "But the statement could also be an effort by the Lippo Group to get a better price by playing hard to get," he added.
International retailers are jockeying for position in emerging markets as they look for sources of growth outside maturing U.S. and European markets, although the cost of competing is often too much to justify widespread expansion.
A source close to the deal told Reuters that the bids for Matahari's hypermart business were below the company's expectations. The source declined to be identified because the information was not public.
The sale process had been widely watched, coming hard on the heels of a decision by French retailer Carrefour to sell its Thai assets to Casino for $1.2 billion.
Indonesia has become a hot destination for foreign investors because of its rapidly growing economy that is generating interest in consumer-driven sectors such as retail and banks.
Indonesia's benchmark index soared 46 percent last year, making it one of Asia's best performing stock markets.
Matahari, a retailer controlled by one of Indonesia's biggest conglomerates, Lippo Group, said last month that four companies were interested in investing in the company as majority shareholders and becoming a partner to expand the hypermarket business. [ID:nL3E6N21BR]
Matahari shares tumbled 7.8 percent on Monday, greater than the 4 percent fall on the broader stock market.
PRIZED ASSET
Hypermart was Indonesia's second-biggest hypermart chain after PT Carrefour Indonesia, with 52 outlets in the world's fourth most populous nation, generating an annual revenue of $1 billion.
Following a strategic review by Bank of America's Merrill Lynch, Matahari also said on Monday that it plans to sell non-core, non-food retailing assets.
"We would like to bring in a strong global partner and are determined to retain and grow our Hypermart business and to streamline other non-core operations," Benjamin Mailool, president director of Matahari Putra Prima said in a statement.
"We welcome the interests of global players to invest or acquire a substantial interest in Matahari Putra Prima. But it is important to note at this moment that there is no assurance that any of the plans will materialize," he added.
On Friday, a source said Lotte Shopping entered the second round of bidding to buy Hypermart. [ID:nTOE70607D]
Sources had also said France's Casino had also been expected to submit a second-round bid. Lotte Shopping declined to comment on Monday, while Casino was not immediately available for comment. - Reuters
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