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San Miguel bid fails to shore up Indonesia’s Bumi shares

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November 7, 2008

San Miguel bid fails to shore up Indonesia’s Bumi shares
Shares of Indonesia's largest coal producer, PT Bumi Resources Tbk, opened down almost 10 on Friday, despite a plan by Philippine conglomerate San Miguel Corp to bid for a 51 percent stake in the company, reported Reuters.

San Miguel, Southeast Asia's biggest food and drinks company, said on Thursday in a statement to the Philippine Stock Exchange that discussions on the transaction were ongoing.

Bumi, which is controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie, is the core asset in the Bakrie group.

Concerns about the financial health of the politically connected Bakrie group have contributed to a sharp sell-off in Indonesia's stock market, prompting the authorities to close the exchange for three days last month.

PT Bakrie & Brothers Tbk, the group's holding company, said last month it hoped to raise $1.2 billion by selling off stakes in various assets, including Bumi Resources.

Bakrie & Brothers announced at the weekend that it had reached an agreement to sell its entire 35 percent stake in Bumi to Northstar Pacific for $1.3 billion, to pay off its debts.

It was not clear from which shareholders San Miguel might seek to purchase additional shares to control 51 percent of Bumi.

Shares in Bumi opened down 9.9 percent at 1,780 rupiah on Friday. The exchange has a downward limit of 10 percent.

The broader market .JKSE opened down 2.6 percent.

Bumi shares also fell more than 9 percent on Thursday after the stock exchange lifted a trading suspension that had in been place for around a month.

Traders have said that strong pressure from margin calls remains hanging over Bumi.

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