Per media reports, Philip Morris International Inc. PM is selling part of its stake in its Indonesian unit — PT HM Sampoerna Tbk (“Sampoerna”). The tobacco maker currently holds a 98.18% stake in the unit.
Philip Morris decided to dilute its interest in Sampoerna to comply with the new rule implemented by the Indonesian stock exchange. Now, all the listed companies in Indonesia are required to have at least a 7.5% share in public hands. As a result, Philip Morris wants to increase the public hold in the company from 1.82% to 7.5%.
Media reports also state that Philip Morris seeks to raise $1 billion by selling its stake, which, if realized, would be the largest share sale in South East Asia. Philip Morris has reportedly engaged The Goldman Sachs Group Inc. GS, Credit Suisse Group AG CS, JP Morgan and local firm Mandiri Sekuritas for the sale.
Philip Morris acquired Sampoerna in May 2005 while it was still a subsidiary of Altria Group Inc. MO. Sampoerna is a leading tobacco company in Indonesia where tobacco consumption is widespread. The company produces kretek-type clove cigarettes and owns the popular brand, Sampoerna 'A' Mild, a filter cigarette.
Philip Morris, currently carrying a Zacks Rank #3 (Hold), is slated to release its second-quarter fiscal 2015 earnings results on Jul 16. Management raised its fiscal 2015 guidance based on higher-than-expected first quarter results.
The company’s focus on the growing category of e-cigarettes and less harmful alternative tobacco products should bode well. Moreover, the company plans to increase investment in research and development in the category in 2015.
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