SINGAPORE (THE BUSINESS TIMES) - Property developer OUE on Wednesday morning (May 5) announced it had established a joint venture (JV) company to acquire up to a 40 per cent stake in Jakarta-listed PT Matahari Department Store Tbk (Matahari).
Named Auric Digital Retail, the JV firm will be 60 per cent owned by Auric Bespoke I, a wholly owned subsidiary of Auric Capital Holdings, with the remaining 40 per cent stake held by OUE subsidiary OUE Retail Holdings.
The acquisition will be made by way of a voluntary tender offer for Matahari for a consideration of 1,530 rupiah (S$0.14) per offer share.
This is to be funded via a $95 million facility agreement granted by CIMB's Singapore branch - as well as shareholder loans of up to an aggregate principal amount of $150 million, made by OUE and Auric Bespoke I to the JV company.
As part of the deal, Auric Digital Retail has also agreed to acquire a 5.32 per cent stake in Greater Universal Limited (GUL) as well as a 4.8 per cent interest in OUE Investments after the voluntary offer is made.
GUL and OUE Investments are wholly-owned subsidiaries of Auric Capital and OUE, respectively.
Auric Digital Retail will hold up to 50.12 per cent of Matahari and thus become its controlling shareholder upon completion of the abovementioned acquisitions.
In its filing, OUE notes that Matahari's shares have underperformed those of its peers on a five-year basis, despite its market leadership position with a unique portfolio of assets.
"(Auric Digital Retail) recognises the challenges in the Indonesian large format retail industry and the threat from competition, but believes that (Auric Bespoke I and OUE Retail) possess sufficient experience and expertise in the consumer, retail and digital sectors and can work with management of (Matahari) to develop a refreshed strategy and improve the prospects of (Matahari's) business," said OUE.
Highlighting that Matahari has "generally recorded healthy positive cash flows" prior to Covid-19, OUE said it believes its proposed acquisitions through Auric Digital Retail will allow it to expand the group's consumer division footprint into the growth market of Indonesia.
Shares of the group were trading $0.03 or 2.1 per cent lower at $1.40 as at 9.43am.