Etika buys Indonesian instant noodle maker and distributor

Company enters new food and beverage sector in Indonesia with $2.9mln acquisition of PTSF and PTSB.

Etika International Holdings Limited, manufacturer and distributor of sweetened condensed milk, announced on Monday that it has entered into a conditional sale and purchase agreement for the proposed acquisition of 100% equity interest in P.T. Sentrafood Indonusa (PTSF) and P.T. Sentraboga Intiselera (PTSB) (PTSF and PTSB are collectively referred to as the Target Companies) for an equity consideration of Rp10,000 and estimated assignment consideration of Rp19.1 billion (approximately S$2.9 million), according to an Etika report.

The Target Companies are engaged in the business of manufacturing and distributing instant noodles in Indonesia. PTSF manufactures and distributes its instant noodles under the trademark of “Salamie” and “Cintamie” and is also an OEM manufacturer for a few private label products (eg. Mie Sehati and Pandaroo). PTSF’s products are currently distributed locally in Indonesia and overseas via authorised distributors to countries such as Saudi Arabia, Malaysia and Brunei Darussalam. PTSB is the main distributor for PTSF in the Central and East Java regions.

Etika’s Group Chief Executive Officer, Dato’ Kamal Tan said, “The venture into instant noodle business signifies a new direction for the Group’s business expansion plan and diversification of the Group’s existing product offerings. Indonesia, with its large population base, represents a huge market for instant noodle demand as it constitutes approximately 15% of the world’s market share, being the second largest after China and Hong Kong. The Group already has an existing presence in Indonesia with the acquisition of a distribution company (PT Vixon Indonesia) in September 2009, primarily for the distribution of condensed milk. Pursuant to the acquisition of the Target Companies, this will provide greater access for the Group to market our products in Indonesia as we will be able to leverage on the enlarged distribution network.”

“As for the Target Companies, they will be able to gain greater overseas market share for instant noodles via our network in Malaysia and over 60 countries around the world.”

Dato’ Tan further added, “One of the key investment merits of this acquisition is the access to land bank and unutilised factory spaces of the Target Companies, which allow the Group to shortcut the gestation period required to set up its condensed milk manufacturing facilities in Indonesia. Being able to produce our condensed milk locally for distribution in Indonesia will help us to remain competitive in this market. In addition, we will be able to reap economies of scale from the lower overhead and
other operating costs.”

The completion of the acquisition, amongst others, is subject to the approvals from the shareholders of Etika and Singapore Exchange Securities Trading Limited (“SGX”).