Carrefour in final talks to acquire 75% of Alfa

The Jakarta Post, Jakarta

France-based retailer PT Carrefour Indonesia is finalizing negotiations to acquire about 75 percent of local retailer PT Alfa Retailindo (Alfa) in a move that will allow the company to tap into Alfa's growing retail network in East Java, Bali and Lampung.

Carrefour corporate affairs director Irawan D. Kadarman told The Jakarta Post on Wednesday that his company had signed a memorandum of understanding on Dec. 17 with Alfa's majority shareholders, PT Sigmantara Alfindo and Singapore-based Prime Horizon Pte. Ltd., which have 55 percent and 40 percent stakes, respectively, in the publicly listed retail operator. The other five percent is held by the investing public.

"We will finalize the negotiations in the weeks to come. Until then, we cannot divulge any of the details," said Irawan.

Chief commissioner of Alfa, Djoko Susanto, told Detik.com that the parties would hold a second meeting on Jan. 6 to determine a share price.

"The shares may be priced at around Rp 1,950 (20 U.S. cents)," he added.

Sources said that Sigmantara would likely only sell a 35 percent stake in Alfa and retain the other 20 percent. But unlike Sigmantara, Singapore's Prime would probably offload its entire 40 percent stake to the French retailer.

In order to gain control of 75 percent of Alfa, Carrefour would likely launch an open tender to buy the five percent held by the investing public.

Carrefour, which commenced operating in Indonesia in 1998, owns 31 retail outlets in Jakarta; Bandung, West Java; Yogyakarta and Semarang in Central Java; Surabaya; Denpasar, Bali; Medan, North Sumatra; Palembang, South Sumatra; and Makassar, South Sulawesi.

Alfa, which was established in Jakarta in 1989, was listed on the Jakarta Stock Exchange (JSX) in January, 2000, and operates 29 supermarket outlets in Jakarta; Surabaya; Malang and Jember, East Java; Cirebon, West Java; Denpasar, Bali; and in Lampung.

The company is facing declining sales, especially in Jakarta amid growing competition from other retail giants, such as Matahari's Hypermarket and Carrefour itself.

Alfa's sales dropped 9 percent to Rp 2.4 trillion during the first nine months of this year from Rp 2.63 trillion in the same period last year.

The company still managed to increase its net profit by 1.2 percent to Rp 17.13 billion (around $1.8 million) despite the lower revenues. (nkn)