Sampoerna and Phillip Morris in Strategic Alliance
Thursday, 19 October, 2006 | 11:53 WIB

Tempo Interactive, Jakarta: PT Hanjaya Mandala Sampoerna Tbk is to form a strategic alliance with PT Philip Morris Indonesia.

Under this, Sampoerna can use the distribution network and funding from the holding company.

This is a part of five cooperation transactions between the two companies, approved by Sampoerna’s Extraordinary General Meeting (EGM) in Jakarta yesterday (18/10).

The previous two Sampoerna’s EGMs failed to reach any cooperation agreement because of rejection by independent shareholders.

Salman Hameed, Sampoerna’s Chief Financial Officer, said the materials at the latest meeting were broader than those of the previous meetings.

“The approval creates synergy and will benefit Sampoerna,” he said after the meeting.

According to him, there are five business transactions between Sampoerna and Philip Morris, its holding or affiliate company.

Those include distribution, goods and service procurement, license and financing.

In distribution, Sampoerna can be appointed as non-exclusive distributor for certain products or brands.

As regards goods procurement transaction, the company may supply machinery, spare parts and base commodities.

In addition, Sampoerna has obtained a license to produce or distribute Philip Morris’ products or brands in certain areas outside Indonesia.

The company can also make rental agreements or cash management agreements with this United States’ cigarette company.

However, Sampoerna has not yet prepared specific plans regarding the five business transactions.

“They haven’t been identified nor estimated,” said Andrew White, Sampoerna’s Director.

The cooperation alliance is a follow-up to Philip Morris’ entry as the owner of 98 percent of Sampoerna’s shares since last year.

Currently, Sampoerna’s market share is 23.5 percent of the total cigarette industry, up from last year’s figure of 22.4 percent.

On the same occasion, Andrew said that Sampoerna will focus its business on its main core, cigarettes.

So there is the possibility that the company will spin off subsidiaries outside of its main business.

There are two subsidiaries, PT Taman Dayu in golf service sector and PT Agasam in the retail sector.

“If they’re not beneficial, perhaps they will be sold,” said Niken Rachmad, Sampoerna’s spokersperson.

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