| To: Business Editor | For immediate release |
DAIRY FARM ACQUIRES STAKE IN LEADING INDONESIAN SUPERMARKET CHAIN
17th February 1998 -- Dairy Farm International Holdings Limited, the international retailing and wholesaling group, today announced agreements with PT Hero Supermarket ("Hero"), the leading supermarket chain in Indonesia, and PT Hero Pusakasejati. The agreements provide for Dairy Farm to take a stake in and make available management resources and expertise to Hero.
Dairy Farm has purchased from PT Hero Pusakasejati a bond, exchangeable into 24.55% of the ordinary shares of Hero, and a further 6.63% direct shareholding in Hero for a total consideration of US$36.4 million, giving Dairy Farm an effective interest of 31.18%. The bond is exchangeable for Hero shares after five years at no additional premium or cost. The consideration is being funded from Dairy Farm's existing cash resources.
PT Hero Pusakasejati is owned by the Kurnia family, the founders of Hero and its controlling shareholders.
Announcing the agreements, Dairy Farm's Group Chief Executive, Ronald J Floto, said, "We have worked alongside Hero since 1995 in developing Mitra Toko Diskon's discount grocery store chain. The strategic alliance between our two groups will benefit Hero customers, employees and suppliers, and ensure that Hero enhances its position as Indonesia's premier supermarket chain. We believe that Indonesia will overcome its current difficulties and the long-term prospects for the country's retail sector remain good."
Mr Floto added, "This investment represents an excellent strategic opportunity for Dairy Farm to expand its interests in Indonesia, one of the most important markets in Asia, and to advance our stated strategy of growth in the Asia-Pacific Region."
Mr Floto said that while the cost of the investment will have a small negative effect on Dairy Farm's earnings per share in the early years, improved returns are expected as the market grows and as Hero benefits from Dairy Farm's management input.
Michael Kok, Dairy Farm's Regional Director for South Asia, will join Hero as Chief Operating Officer whilst retaining regional responsibilities for South Asia for Dairy Farm. Ipung Kurnia will remain its President Director and Chief Executive Officer.
Hero is the leadingsupermarket chain and food retailer in Indonesia, with a total of 71 supermarkets located in Java, Kalimantan, Bali and Sumatra. In addition, the company has fast food outlets, baking operations and personal convenience stores. In the year ended 31st December 1996, Hero reported sales of IDR905 billion, income from operations of IDR13.6 billion and net assets of IDR219 billion. The company was founded in 1971 and was listed on the Jakarta Stock Exchange in 1989.
For further information please contact:
| Dairy Farm Management Services Limited Edouard Ettedgui |
(852) 2837-6481 (office) |
| The Hero Group Ipung Kurnia |
(62-21) 831-1243 (office) |
| Ludgate Asia Limited Trish Harwood |
(852) 2543-5413 (office) |
This announcement can be accessed through the Internet at
"http://www.irasia.com/listco/sg/dairyfarm" and is also available through "First Call".
Dairy Farm is an international retailing and wholesaling group which focuses primarily on the Asia-Pacific Region, with additional interests in the United Kingdom. The Group operates some 1,350* outlets, principally supermarkets, convenience stores and drugstores, and its associates operate a further 1,300. The Group employs some 44,000* people and its associates a further 41,900. In 1996, Dairy Farm reported sales of US$7,000 million which, with its associates, totalled some US$12,800 million.
Since the middle of 1997, the Group has significantly strengthened its operating management and has taken steps to focus on its core retail activities in the Asia Pacific Region. Recent disposals have included its joint venture food manufacturing interests and its Spanish supermarket chain. Decisions have also been taken to close its loss-making drugstore chain in Taiwan and pilot supermarket operation in Japan.
The primary share listing of the parent company, Dairy Farm International Holdings Limited, is in London and the bulk of its shares are traded in Singapore. The Company is incorporated in Bermuda, and its businesses are managed from Hong Kong by Dairy Farm Management Services Limited through regional offices in Asia, Australasia and Europe.
* These figures do not include Simago, Mannings Taiwan and Wellsave Japan.
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