OUE in joint venture to acquire controlling stake in Indonesian retailer Matahari

PROPERTY developer LJ3 on Wednesday morning announced it had established a joint venture (JV) company with Auric Bespoke I - a wholly-owned subsidiary of Auric Capital Holdings - with the intention of acquiring up to a 40 per cent stake in Jakarta-listed PT Matahari Department Store Tbk (Matahari).

Named Auric Digital Retail, the JV firm will be 60 per cent owned by Auric Bespoke I, with the remaining 40 per cent stake held by OUE's subsidiary OUE Retail Holdings.

The acquisition will be made by way of a voluntary tender offer for Matahari for a consideration of 1,530 rupiah (S$0.14) per offer share.

This is to be funded via a S$95 million facility agreement granted by CIMB's Singapore branch - as well as shareholder loans of up to an aggregate principal amount of S$150 million, made by OUE and Auric Bespoke I to the JV company.

As part of the deal, Auric Digital Retail has also agreed to acquire a 5.32 per cent stake in Greater Universal Limited (GUL) as well as a 4.8 per cent interest in OUE Investments after the voluntary offer is made.

GUL and OUE Investments are wholly-owned subsidiaries of Auric Capital and OUE, respectively.

Auric Digital Retail will hold up to 50.12 per cent of Matahari and thus become its controlling shareholder upon completion of the abovementioned acquisitions.

In its filing, OUE notes that Matahari's shares have underperformed those of its peers on a five-year basis, despite its market leadership position with a unique portfolio of assets.

"(Auric Digital Retail) recognises the challenges in the Indonesian large format retail industry and the threat from competition, but believes that (Auric Bespoke I and OUE Retail) possess sufficient experience and expertise in the consumer, retail and digital sectors and can work with management of (Matahari) to develop a refreshed strategy and improve the prospects of (Matahari's) business," said OUE.

Highlighting that Matahari has "generally recorded healthy positive cash flows" prior to Covid-19, OUE said it believes its proposed acquisitions through Auric Digital Retail will allow it to expand the group's consumer division footprint into the growth market of Indonesia.

OUE shares closed lower by S$0.03, or 2.1 per cent, at S$1.40 on Wednesday, after the announcement.

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