SCB and Citi support Emtek

Standard Chartered Bank and Citi supporting fund IDR1.5 trilion for Elang Mahkota Teknologi (Emtek) to acquire TV network Indosiar.

Emtek , the majority shareholder of Surya Citra Televisi, said it was closing in on a IDR2.03 trillion deal to buy Indosiar, which would form the nation’s second-biggest broadcasting group.

Emtek — a media, telecommunications and IT solutions company — said it was planning to buy Prima Visualindo’s controlling 27.24 percent stake in Indosiar, valued at IDR496.5 billion, through a private placement, and the remaining shares worth IDR1.53 trillion through a tender offer, pricing each at IDR900 to IDR1,400 each.

Attempts to reach Prima Visulalindo to confirm the deal were not answered. Emtek said it would finance the acquisition through loans, putting up as collateral its shares in SCTV, which are valued at Rp 5.8 trillion at the current market price. It will also issue 512.73 million new Emtek shares, pricing each at Rp 1,300.

Indosiar is controlled by the Salim family through Prima Visualindo, with significant stakes held by Citibank Singapore and Dinamika Usaha Jaya. Emtek is owned by the Sariaatmadja family.

Sinergy between SCTV and the Indosiar can be traced back four years, when the Salim family bought a stake in the Sariaatmadja’s plantation company, Perusahaan Perkebunan London Sumatra Indonesia.

Salim Group, through Indonfood Sukses Makmur, acquired a 56 percent stake of London Sumatra in 2007. In exchange, the Sariaatmadja family would acquire Indosiar the same year. The deal was designed to allow Salim to focus on the palm oil industry while Sariaatmadja Group could tune into TV broadcasting. However, Sariaatmadja delayed the Indosiar acquisition because the station’s performance was poor and there was the possibility that the purchase could be ruled a monopoly under the 2002 Broadcasting Law.

The biggest TV stations in Indonesia are Rajawali Citra Televisi Indonesia, owned by tycon Hary Tanoesoedibjo, followed by SCTV and Chairul Tanjung’s TransTV. There are 11 TV stations with national reach.

According to Nielsen’s audience data as of September, Indosiar’s market share was the fifth-biggest at 10.1 percent, while SCTV controls 14.8 percent. The combination of the two stations would make it the second largest after Hary’s MNC Group, which holds 37 percent of the market through its RCTI, MNC TV and Global TV stations.

Meanwhile, tycoon Chairul’s Para Group has 23.7 percent share via TransTV and Trans7. The Bakrie Group also controls two broadcasters under its Viva Media Group, TVOne and ANTV.