Indonesia’s Indofood CBP to Buy Pinehill Co. for $3 Billion

(Bloomberg) -- PT Indofood CBP Sukses Makmur, owned by Indonesian billionaire Anthoni Salim, plans to acquire a producer of instant noodles in Africa and the Middle East for $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., it said Monday. Indofood CBP will hold a shareholders’ meeting on July 15 for the proposed transaction, it said.

Pinehill Group manufactures and sells instant noodles, with its key markets being Saudi Arabia, Nigeria, Egypt, Turkey, Serbia, Ghana, Morocco and Kenya. It has 12 factories with a production capacity of approximately 10 billion packs, Indofood CBP said.

Indofood CBP will pay $1.53 billion to Pinehill Corpora for its 51% stake and $1.47 billion to Steele Lake for its 49% stake, the company said. The acquisition will be funded through a mix of internal resources of $300 million and third-party bank borrowings, Indofood CBP said.

Under the terms of the deal, Pinehill Co. and Steele Lake are guaranteeing $128.5 million in consolidated group net income through December 2021. The acquisition value may be adjusted if the sellers fail to meet the profit guarantee within a 5% deviation, Indofood CBP said.

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, it said. Indofood CBP has annual production capacity of 19 billion packs of instant noodles, according to its 2019 annual report.

Indofood CBP Sukses Makmur advanced as much as 2.6% in Jakarta trading, shares of parent Indofood Sukses Makmur rose as much as 1.2%.

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