Philip Morris to Sell Stake in HM Sampoerna to Increase Free Float
In order to comply with new rules, Philip Morris International Inc. will increase the free float ratio of its Indonesian unit HM Sampoerna on the Indonesia Stock Exchange (IDX) from 1.82 percent to 7.50 percent. Per January 2016, all listed companies on the IDX are required to have at least 7.5 percent of their shares in public hands. Currently, however, Philip Morris owns 98.18 percent of HM Sampoerna, Indonesia’s largest cigarette manufacturer and among the largest Indonesian companies listed on the IDX in terms of market capitalization.
USA-based global cigarette and tobacco giant Philip Morris International, which bought HM Sampoerna in 2005, seeks to raise USD $1 billion from this stake sale according to local sources. This would imply that the sale would be one of the largest share sales in Southeast Asia in 2015. Reportedly, Goldman Sachs Group Inc., Credit Suisse Group AG, J.P. Morgan and Mandiri Sekuritas will manage the sale, which is expected to be concluded before the end of the year.
HM Sampoerna controls about 34 percent of Indonesia’s tobacco market with its seven manufacturing facilities: two machine-made kretek production facilities and five handrolled kretek production facilities (kretek cigarettes are the highly popular clove cigarettes that are a trademark of Indonesia). The company produces some of the country’s most famous kretek cigarette brands, such as Sampoerna Hijau, Sampoerna A Mild, and the legendary “King of Kretek” Dji Sam Soe.
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For more information on Indonesia’s tobacco industry and government regulations that influence cigarette sales read the following columns:
• Smoking in Indonesia: Government’s Mixed Tobacco Control Policies
• Indonesian Tobacco Products Subject to Excise Tax Hike in January 2015
• Company Profile of HM Sampoerna