Yohanes Obor & Ardian Wibisono

One of the 88 Matahari stores, which have been acquired by CVC Capital. (Antara Photo/Noveradika)

Private Equity Firm Snaps Up Matahari in Rp 7.2t Deal

CVC Capital Partners, a global private equity firm, has agreed to take over Matahari, the nation’s largest department store chain, in another sign that foreign investors are continuing to warm to Indonesia.

CVC, which owns 52 companies worldwide, including Formula One, has entered into an agreement with PT Matahari Putra Prima to form a joint venture that will acquire 90.76 percent of PT Matahari Department Store for Rp 7.2 trillion ($770 million), or Rp 2,705 per share.

Matahari Putra Prima will hold a stake of about 20 percent in the joint venture, called Meadow Asia. The rest will be owned by CVC. Meadow Asia will control total assets of Rp 8 trillion.

News of the deal prompted shares of Matahari Department Store to jump 24 percent. Meanwhile, Matahari Putra Prima’s shares jumped 11 percent.

“CVC has a proven track record of investment success, including numerous investments in the consumer retail space, and will contribute its retail expertise supported by its extensive global network,” Matahari Putra Prima said in a statement. “This strategic alliance will support Matahari’s future growth and expansion. It also demonstrates strong foreign investor confidence in Indonesia and contributes significantly to the growth of the domestic economy.”

Matahari Department Store, which operates 88 outlets around the country, said the deal will bring added value. The joint venture will also facilitate its plan to roll out more than 150 new stores over the next 10 to 15 years.

The acquisition requires approval from shareholders at a meeting to be held within 40 days, Benjamin Mailool, president director of Matahari Putra Prima, said at a press briefing.

In a letter to the Indonesia Stock Exchange (IDX), Matahari Putra Prima said it had received a commitment letter from PT Bank CIMB Niaga and Standard Chartered Bank to provide the company with a credit facility.

Arif Pitoyo, an analyst from PT Mandiri Sekuritas, said competition in the department store sector will become more interesting once the deal is approved.

Arif said that although listed retail companies in Indonesia usually offer less-attractive dividends than some of the top-performing mining companies, the sector remained promising because of the country’s huge population.

He also said the acquisition price, which is 1.4 times sales value, is quite fair.

“The question is what Matahari is going to do with the money they get from selling this unit. Giving a special dividend should be an option if they want their shares to be more attractive,” Arif said, adding that the Lippo Group’s listed companies usually have less-liquid shares.

The Lippo Group owns the majority of the shares in Matahari Putra Prima through PT Multipolar. The Jakarta Globe is affiliated with the Lippo Group.

Benjamin said a special dividend was an option but that the final decision would be dependent on the deal getting shareholders’ approval.

Matahari Putra Prima also owns 47 Hypermart stores, 27 Matahari supermarkets, 53 pharmacies and 16 bookstores.

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