Indonesia scraps proposal to limit takeovers to 80%

Gulf Times, Sunday, 29 June, 2008, 01:45 AM Doha Time

JAKARTA: Indonesia’s capital markets regulator will allow investors to buy all the shares of a company during a mandatory general offer, scrapping a proposal to limit purchases to 80%.

Under the new proposal, investors will have to sell a 20% stake in the takeover target to the public at a later date, Ahmad Fuad Rahmany, chairman of the Capital Market and Financial Institutions Supervisory Agency, said.

The regulator raised the threshold that will trigger a mandatory offer to 50% from 25%, Rahmany said. The new rules would allow Qatar Telecom to abandon its general offer for PT Indosat, Indonesia’s second-largest phone company.

“Qatar Telecom is not obligated to do a tender offer,” Rahmany said in a mobile-phone text message on Friday.

On June 7, Qtel agreed to pay $1.76bn to buy a 40.8% stake in Indosat. The Doha- based company said on Friday it would complete a general offer in 30 days, at a price of 7,388 rupiah a share.

“If they voluntarily want to buy public shares, then they might be limited by other regulations,” Rahmany said.

Under government rules, an overseas investor is limited to a 65% stake in an Indonesian mobile-phone operator and a 49% stake in a fixed-line phone company. Indosat made 77% of its sales from its mobile-phone units.

Malayan Banking, Malaysia’s biggest bank that’s buying 56% of PT Bank Internasional Indonesia, may have to offer to buy all the shares of the Indonesian bank. Bank Internasional’s shares rose 5.8% to 460 rupiah at the Jakarta close, a two-week high.

Still, investors said the requirement to ensure 20% of the stock is owned by the public at a later date may deter some companies from purchasing rivals.

“Selling shares at a later stage can be problematic because share prices may decline over time,” said Finny Fauzana, who helps manage about $347mn in assets at PT PNM Investment Management in Jakarta. “That’s bad for the company making the acquisition.” – Bloomberg