After a few days of trading suspension, pending the clarity of Surya Citra Media (SCMA IJ) and Indosiar (IDKM IJ) merger deal, Emtek Group (EMTK IJ) has shed some light on the matter with its official announcement yesterday.
As SCMA’s parent company, Emtek announced yesterday that Indosiar (IDKM IJ) will be merged into the group at the parent company level. Emtek plans to acquire a controlling stake in Indosiar, positioning Indosiar as SCMA’s sister company.
As SCMA’s parent company, Emtek announced yesterday that Indosiar (IDKM IJ) will be merged into the group at the parent company level. Emtek plans to acquire a controlling stake in Indosiar, positioning Indosiar as SCMA’s sister company.
Key points for the announcement are as follows:
• Emtek will be purchasing 27.24% of Indosiar from Prima Visualindo, the current majority shareholder of Indosiar.
• Purchase price is set at Rp900 per share, lower than the pre-suspension close of Rp1,010 per share. Total acquisition cost is Rp496.5bn.
• Emtek is required to do a tender offer following the acquisition. Tender offer price announced is the same as the purchase price at Rp900 per share. Depending on the subscription rate, Emtek will need another Rp1.8tn at most for the tender offer. There will be no earnings consolidation between Indosiar and SCMA. However, key benefits for both stations are as follows:
• Both stations will have greater bargaining power following the ownership consolidation. The two stations combined will be the second largest media group with 25% audience share.
• Both stations will benefit from synergies whereby they can share licensing rights, studios, broadcasting towers, talents, and other broadcasting assets.
• Potential turnaround story for Indosiar. Emtek’s SCMA is one of the best stations in terms of cost efficiencies, brand recognition, and cashflow management. Assuming that Emtek will do the same for Indosiar, the turnaround is imminent. Company that will benefit from the turnaround is Emtek at the parent level.
The merger is hugely positive for the Indonesian media sector. Consolidation ease competition, and the top three media players: MNC Group (RCTI, MNC TV, and Global TV), Emtek (SCTV and
Indosiar), and the Trans Group (Trans TV and Trans 7) control almost 90% of the total audience
share. Emtek looks interesting, given it is exposed to Indosiar’s turnaround story.
Indosiar), and the Trans Group (Trans TV and Trans 7) control almost 90% of the total audience
share. Emtek looks interesting, given it is exposed to Indosiar’s turnaround story.