Business News – Wednesday, September 24, 2008The Jakarta Post, Jakarta

Publicly listed PT Indofood Sukses Makmur, the world’s largest instant noodle maker, is expanding into the dairy industry by acquiring the parent company of dairy producer PT Indolakto for US$350 million.

In its statement to the Indonesia Stock Exchange (IDX) on Tuesday, Indofood said it had signed a conditional sale-and-purchase agreement with Pastilla Investment Ltd. to buy 100 percent of Singapore-based Drayton Pte. Ltd, which owns 68.57 percent of Indolakto.

Indofood expects the acquisition to be completed in December, with the company already having paid 15 percent of the purchase amount at the deal-signing, or $52.5 million. The remaining 85 percent ($297.5 million) will be settled within seven working days after necessary requirements have been met.

The company — founded by tycoon Sudono Salim, known as a crony of the late former President Soeharto — will use its internal cash and bank loans to finance the acquisition.

Indolakto produces a number of dairy products including cream, butter, skim milk and ice cream, under brand names such as Indomilk, Cap Enaak, Tiga Sapi, Orchid Butter and Indoeksrim.

Indonesian conglomerate Salim Group, which owns Indofood, had held a stake in Indolakto before selling the shares in exchange for a government bailout, back in 1997 during the Asian financial crisis.

Investment in the milk industry was deemed a potential boon because Indonesia’s milk consumption per capita still lags behind that of neighboring countries, the company said in its statement.

According to the Health Ministry, Indonesia’s per capita consumption of milk was nine liters in 2007, while Vietnam’s and Malaysia’s were 10.7 and 25.0 liters, respectively.

Indonesia’s population is estimated at 234 million, far higher than either of those countries, whose inhabitants numbered 85 million and 25 million, respectively. (iwp)

Indolakto productions

Facility: Capacity
1. Sweetened condensed milk 162.9 million kilograms
2. Powdered milk 14.7 million kilograms
3. Bottled milk 34.6 million liters
4. UHT milk 46.7 million liters
5. PLM milk 16.3 million liters
6. Ice cream 16.7 million liters

Source: Indofood

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