The maker of Indomie instant noodles is aiming to buy out Indofood Agri Resources and take it private.
Indofood Sukses Makmur is offering 28 cents a share for the Singapore-listed agribusiness group, an offer that values the company at $390.9 million.
The bid comes at a 7.7 per cent premium to Indofood Agri's closing price of 26 cents on April 5 before trading was halted for the announcement.
Indofood Sukses Makmur, which is controlled by Indonesian tycoon Anthoni Salim, already holds a 74.52 per cent stake in Indofood Agri.
Its offer is conditional upon obtaining control over at least 90 per cent of the stake. It will then delist the firm.
The company said in a Singapore Exchange filing that its offer gives Indofood Agri shareholders an opportunity to realise their investment, which "may otherwise not be readily available" due to the "low trading liquidity of the shares".
The offer price represents a premium of approximately 21.5 per cent over the volume-weighted average price per share for the month up to April 5.
Indofood Agri and its units will continue to develop and grow their existing businesses and there are no plans by Indofood Sukses Makmur to introduce major changes.
The offer document will be issued within 14 to 21 days from the announcement date.
DBS analysts William Simadiputra and Lim Rui Wen said shareholders should accept the offer even though it is "at the lower end of acquisition multiples for plantations".
"We believe that Indofood Agri's steep discount to its peers is attributed to its shrinking operating profit margins, unlike its peers who have been able to demonstrate an ability to maintain their margins amid palm oil price movements," they added.
But independent analyst David Blennerhassett said Indofood Sukses Makmur could afford to raise the offer price and "impart some justice to long-suffering minorities", having recently bounced off multi-year low levels against a weakening global demand for palm oil.
"This strikes me as an offer requiring a bump to get it over the line," Mr Blennerhassett said on Smartkarma.
He added that the deal is "small beer" for Indofood Sukses Makmur as Indofood Agri's free float is at 25.48 per cent, so a successful offer would cost just around US$67 million (S$90.7 million).