DBS Kalbe Farma Announced tender offer plan on Enseval Putera Megatrading

(Rec & TP under review; KLBF IJ; Rp1,020)

Kalbe Farma (KLBF) announced its plan to conduct tender offer for 725.24m shares of Enseval Putera Megatrading (EPMT), or equivalent to 31.81% of ownership. EPMT is KLBF’s distribution arms with around c.23.5% revenue contribution in FY08. After tender offer, KLBF will have 90% ownership in EPMT from its current 58.19%. The proposed tender offer price is Rp870/share and this is higher than market prices in the last 90 days prior to the tender offer announcement (21 March 2009 – 18 June 2009). The tender offer will be conducted for 30 days after the official announcement. The process is now pending approval from the capital market authority (Bapepam).

KLBF had reportedly allocated Rp600-700b of internal cash to conduct this tender offer and its cash balance as at 31 March 2009, KLBF stood at Rp1.6tr. EPMT’s latest closing price is Rp820, or 6.1% lower than the proposed tender offer price. We will review our forecast and recommendation on KLBF.