Company offers to buy Indonesia tobacco firm

Monday, March 14, 2005 | 9:38 a.m.

Philip Morris International Inc., a division of Altria Group Inc., offered to buy Indonesian tobacco company PT HM Sampoerna for about 48 trillion rupiah ($5.1 billion) to expand in a country where smoking is growing.

Philip Morris agreed to buy 40 percent of Sampoerna, Indonesia's third-largest tobacco company, for 10,600 rupiah ($1.13) a share, or 18.6 trillion rupiah, the company said in a statement. It offered to buy the remaining 60 percent for the same price, a 20 percent premium to the March 10 close on the Jakarta Stock Exchange.

The takeover would beat rival R.J. Reynolds Tobacco Holdings Inc.'s $3 billion offer for Brown & Williamson Tobacco Corp. last year in the U.S., where tobacco companies face increased litigation and a shrinking market.

Indonesia "is a market that provides high potential for investors," said Winson Fong, who helps manage $2.3 billion at SG Asset Management in Singapore, including Indonesian stocks such as Sampoerna. "The investment is for long-term purposes. It is better to go in via a local player."

The acquisition would include debt of $160 million, Philip Morris said in the statement.

The all-cash purchase would add "modestly" to Altria's 2005 earnings per share, Philip Morris said in the statement. Credit Suisse First Boston Inc. is advising the company on the purchase, Philip Morris said.

Altria spokesman Nicholas Rolli didn't immediately return a voice mail left at his office Sunday evening. Shares of New York- based Altria fell 35 cents to $65.14 in New York Stock Exchange composite trading March 11 and have risen 16 percent in the past year.

Shares of Surabaya, Indonesia-based Sampoerna have almost doubled in the past year. The stock rose as much as 1,550 rupiah, or 18 percent, to a record 10,400 rupiah as of 9:30 a.m. in Jakarta.

--Editors: Siler, Majendie, T.Jordan.

To contact the reporter on this story: Danny King in San Francisco at (1) (415) 912-2974 or dking19bloomberg.net.

To contact the editor responsible for this story: Dan Reichl at (1) (415) 912-2998 or dreichlbloomberg.net.

-0- Mar/14/2005 2:42 GMT