Siam and Itochu Still In Hunt for Sulfindo Deal
Janeman Latul & Saeed Azhar
Thailand’s Siam Cement and Japan’s Itochu Corporation have advanced to the next round of bidding for Indonesian chemical firm Sulfindo Adiusaha in a deal worth up to $700 million, sources with direct knowledge of the bidding said on Thursday.
The auction comes on the heels of Siam Cement’s acquisition of a 30 percent stake in Indonesian firm Chandra Asri Petrochemical for $442 million, signaling competition for chemical assets.
The auction deal is another indication of increasing foreign interest in Southeast Asia’s biggest economy, which is attracting investors due to its strong growth.
However, several deals have faltered recently because Indonesian businesses have high price expectations, analysts said.
If Siam Cement wins the auction, it will be the company’s biggest overseas acquisition.
“Siam Cement can definitely afford this,” said senior analyst Therdsak Taveetheeratham with Asia Plus Securities, Thailand’s third-largest brokerage.
“They have tons of cash so I really don’t think money is a big part. As of the end of the second quarter, its cash flow is about 60 billion baht [$1.9 billion],” he said.
The two companies are among three or four parties short-listed for the second phase of bidding after the sale process attracted 8-10 parties in the first round.
Sources were not authorized to comment on the auction because the sale process is confidential.
Sulfindo is controlled by the Victoria Group, owned by Indonesia’s Tanojo family, which also owns Bank Victoria and brokerage Victoria Securities.
Siam Cement, Thailand’s largest conglomerate, declined to comment. Sulfindo did not respond to queries and Itochu was not available for immediate comment.
In May, Standard & Poor’s downgraded Sulfindo’s credit rating to CCC from B-, saying it faced a prolonged delay in obtaining sufficient external financing. Sulfindo could not issue a five-year, fixed-rate dollar bond in January due to weak investor interest.