Indofood CBP to acquire Pinehill for $2.99 bil. in noodle expansion in Middle East, Africa

27, May. 2020

Photo by Ke Vin on Unsplash
Photo by Ke Vin on Unsplash

JAKARTA, NNA - Indonesia’s food giant PT. Indofood CBP Sukses Makmur (Indofood CBP) has struck a deal to acquire the entire shares of Pinehill Co. for $2.998 billion in a strategic plan to be a global player as it expands in the Middle East, Africa and South Eastern Europe.

Pinehill, registered in British Virgin Islands, is a consortium of companies that manufacture and sell instant noodles in eight countries mostly in the Middle East and Africa under the popular Indomie brand licensed by Indofood CBP.

An affiliate of Indofood CBP, Pinehill operates 12 factories that churn out more than 10 billion packs of instant noodles yearly to serve the growing key markets of Saudi Arabia, Nigeria, Egypt, Turkey, Serbia, Ghana, Morocco and Kenya, said Indofood CBP in a disclosure to regulatory authorities last Friday.

Anthoni Salim, the president director and CEO of Indofood CBP, holds a 49 percent stake in Pinehill, while one of his relatives owns 8.3 percent. The remaining 42.7 percent is held by Steele Lake, which is owned by ASM Telok Ayer Fund, an investment fund managed and ultimately controlled by Argyle Street Management Ltd. in Hong Kong.

Indofood CBP said in its statement that the acquisition would be a strategic fit with its core business and present "a golden opportunity to expand into fast growing and profitable new markets" where the demand for halal or Muslim permissible food is dominant.

Pinehill's group sales in 2019 were approximately $533.5 million and its pre-tax profits were around $125.0 million.

It believes the acquisition could be a "transformative step for the company to join an elite group of international food companies and become one of the largest producers of instant noodles in the world."

The transaction will be financed by $300 million of cash from Indofood CBP’s internal resources and borrowings from third party banks.

The instant noodle market has been on the rise in recent years with over 106 billion packets sold in 2019 alone, according to the World Instant Noodle Association.

Indofood CBP’s noodle division runs 16 factories that can produce more than 15 billion packs annually, according to its website.

Indofood CBP, which also produces dairy and snack items, food seasonings and beverages, posted 7 percent growth in sales to 12.01 trillion rupiah ($814 million) in the first quarter of 2020, up from the same period last year.

Income from operations jumped 43 percent to 2.8 trillion rupiah while core profit increased 15 percent to 1.57 trillion rupiah.

In the financial statement released last Friday, Anthoni Salim said, “In the midst of global uncertainties, ICBP remained resilient and recorded top and bottom line growth in the first quarter of 2020. We will continue to monitor and adapt to the evolving situations, whilst managing our business prudently and staying competitive in the industry.”