Indonesia's Lippo Puts First Media Up for Sale (Asian Wall Street Journal, 17 Jan)

HONG KONG—Indonesian conglomerate Lippo Group is seeking to capitalize on surging valuations for companies in the country by selling its listed cable television and Internet business, said people familiar with the matter.

Bidders have been told to lodge their offers with Lippo's advisor on the sale, Bank of America Merrill Lynch, by the end of Monday.

U.S. and European companies are seeking to boost revenues by investing in fast-growing markets such as Indonesia, where the economy is expected to grow by around 6% this year after a similar expansion in 2010. The benchmark stock index rose 46% last year and is up almost threefold over the past two years, making it one of the best-performing markets globally. This year, however, the market has lost steam amid rising concern about inflation. After hitting a record high on Jan. 5, the benchmark index has retreated about 6%. Shares in First Media soared 32% last year and have slumped 14% in the first two weeks of the year.

Deal-making in Southeast Asia, meanwhile, last year hit its highest level since 2007. Mergers and acquisitions of companies in the region totaled US$82.8 billion, according to data tracker Dealogic. Indonesia is the region's largest economy.

One of the people said Lippo was seeking US$600 million to US$800 million for the company, PT First Media Tbk., and a mixture of more than 10 industrial companies and private-equity firms have expressed an interest in acquiring it. However, another said the company would likely fetch a maximum of US$500 million. That still represents a big premium to its current market capitalization of US$158 million, and it's unclear whether prospectivebuyers are willing to meet those expectations.

Lippo has put a high price tag on the asset after other cable companies in the region have sold at lofty prices. In October, MBK Partners, a private-equity firm, agreed to sell its 60% stake in China Network Systems to a consortium led by Hong Kong-listed Want Want China Holdings Ltd., a Taiwan-owned food manufacturer, for about US$2 billion. In November, the Taiwan broadcast regulator approved Carlyle Group's 36 billion New Taiwan dollar (US$1.23 billion) sale of Kbro Co., Taiwan's top cable-TV operator, to the Tsai family, the controlling shareholders of Fubon Financial Holding Co.

Founded in 1994, First Media went public in 2000. The Jakarta-headquartered company reported earnings before interest, taxes, depreciation and amortization of 170 billion Indonesian rupiah (US$18.8 million) on revenue of 605.84 billion rupiah in the nine months ended Sept. 30, according to data provider Capital IQ.

Last year, the Lippo Group lost a case against Malaysia's Astro All Asia Networks PLC that involved a proposed joint venture that would have included First Media. It was ordered to pay about US$230 million by the Singapore International Arbitration Center, which "will seek to enforce the awards" in Indonesia and elsewhere, according to Astro.

Preparations to sell First Media come just after another company controlled by Lippo Group, PT Matahari Putra Prima canceled the sale of its hypermarket business. That deal was shelved last week in favor of a new share issue. Bank of America Merrill Lynch also was an adviser on that sale.