Indofood, which is part of the Salim Group but 50.1%-owned by Hong Kong investment company First Pacific, signed a memorandum of understanding with Drayton back in August to fully take control of its operations, and expects to complete the purchase by December. It has signed a conditional sale-and-purchase agreement with Pastilla Investment to buy 100% of Drayton, which owns 68.57% of Indolakto.
Jakarta-listed Indofood's shares fell by 50 rupiah, or 2.3%, to Rp2,125 during yesterday's trading session.
The Salim Group was a shareholder in Indolakto before the 1997 Asian financial crisis. The Indonesian government took over Indolakto and other Salim companies in exchange for a bailout of a former Salim affiliate, PT Bank Central Asia, after the crisis.
Indolakto's products, which include Indomilk sweetened and pasteurised milk and Orchid Butter, are already distributed throughout Indonesia by an Indofood unit PT Indomarco Adi Prima.
The Salim Group is Indonesia's biggest conglomerate. In addition to Indofood its businesses include: Bogasari, a major flour-milling operation; a large oil plantation business; and huge property development interests, most recently in India.
The group was founded by Sudono Salim a century ago, and this latest move represents an intention to recover lost ground. In its prime, Salim owned Indonesia's biggest retail bank, its largest cement plant, the biggest flour mills and also businesses in car manufacturing, television broadcasting and petrochemicals.
Then the economic crisis hit Indonesia in 1997, and Salim lost almost everything, including its chief patron, President Suharto. The octogenarian patriarch and his family ran away to Singapore as furious mobs burned their property.
The mantle has since been passed to Antony Salim, who has been keen to recreate the companyÆs dominance and recapture a lost empire. Indofood has stayed a constant, while other treasures, such as Bank Central Asia, have gone.