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NEWS UPDATES Asean Affairs        11 January 2011

Hypermart sale off, partner sought

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Indonesia's retail giant Matahari Putra Prima will retain and intensify its Hypermart food retail business as a wholly owned business division following the recommendations of a strategic review conducted by Merrill Lynch (Singapore).

In a statement issued on Monday, the company said it was still looking to bring in a global strategic partner to expand its hypermarket food business while divesting its non-core, non-food related businesses.

Merrill was earlier appointed to undertake a strategic review to identify and examine options for maximizing the value of MPP and to explore serious interest from global retailers for investment and partnership in MPP, the statement said.

Earlier reports said South Korea's Lotte Shopping, French retailer Casino Guichard Perrachon SA and Wal-Mart, the world's largest retailer, had entered bids for Hypermart.

Industry sources said that a number of bidders are still interested in entering into strategic partnership with MPP.

"We will invite strong global retailers and we are determined to retain and develop our Hypermart business," Benjamin Mailool, president director of MPP, said in the statement.

In its strategic review, Merrill Lynch also observed that MPP Food Business had successfully established an impressive nationwide platform and was well-positioned to capture the future growth potential of the Indonesian consumer market.

"Retaining the hypermart business will benefit Matahari in the future as retail business in Indonesia is very promising and getting a license is becoming difficult," Viviet S. Putri, an analyst at Anugerah Securindo in Jakarta, said. "Matahari has a commitment from Merrill Lynch to support the retail business, so it may have many options for its expansion plans."

Matahari is affiliated with the Lippo Group.

Merrill Lynch recommended that the company focus on its core food retailing operations by expanding Hypermart nationwide. MPP currently operates 52 hypermarkets, 25 supermarkets, 53 pharmacy outlets, 90 family entertainment centers and 18 bookstores.

It also has a strategic alliance operating 93 department stores across Indonesia.

Hypermart plans to open at least 13 stores in 2011 and roll out 80 stores during the next five years. The Hypermart business generates approximately $1 billion in revenue a year and is projected to grow by more than 22 percent in 2010.

The sale had been widely observed, coming on the heels of a decision by French retailer Carrefour to sell its Thai assets to Casino for $1.2 billion. Indonesia has become a hot destination for foreign investors with its rapidly growing economy that is generating interest in consumer-driven sectors.

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