IDEAS home Printed from https://ideas.repec.org/a/apa/ijbaas/2017p84-91.html
   My bibliography  Save this article

Merger and Acquisiton(M&A) Analysis of Pt Kimia Farma Tbk and Pt Indofarma Tbk

Author

Listed:
  • RANDY KUSUMA

    (Bandung Institute of Technology, Bandung, Indonesia)

Abstract

Under the 2014-2019 roadmap, Indonesias Ministry of State-owned Enterprises (SOEs) plans to cut the number of SOEs from 119 to 85 and restructure them into 15 sector-based holding companies to improve effciiency. Within healthcare sector, the government has re-initiated the merger plan of PT Kimia Farma Tbk and PT Indofarma Tbk. The government is now considering whether the merger,which actually has been planned since 2005,should be conducted prior to the establishment of holding company. At one side,the government believes that the merger will diminish business overlap between these two SOEs and catalyze growth through synergy. In spite of that, some concerns start to emerge around the plan, including disagreement among shareholders and the uncertain impact of JKN scheme to both companies, among others. Given the aforementioned issues, the purpose of this research is to analyze the feasibility of the merger and propose the most appropriate acquisition scheme. As for the methodology, the author uses PESTLE, SWOT and TOWS to perform qualitative analysis at the economy,industry and company level. For the quantitative analysis,the author performs firm valuation using Discounted Cash Flow(DCF) method to calculate the standalone and post-merger values of both ï¬ rms. Eventuall ,the result shows thatt here is expected synergy that comes from revenue enhancement and costs reduction with total value of IDR 968,332,350,219 under base case scenario, IDR 361,754,014,000 under downside scenario, and IDR 1,274,420,797,608 under upside scenario. The best scheme for this merger will be PT Kimia Farma Tbk acquiring PT Indofarma Tbk using 100% stocks with 0.41 exchange ratio. Through this merger, the two companies will form a stronger and more efficient pharmaceutical SOE that can withstand competition in years to come.

Suggested Citation

  • Randy Kusuma, 2017. "Merger and Acquisiton(M&A) Analysis of Pt Kimia Farma Tbk and Pt Indofarma Tbk," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 3(3), pages 84-91.
    • Handle: RePEc:apa:ijbaas:2017:p:84-91
    DOI: 10.20469/ijbas.3.10001-3
    as

    Download full text from publisher

    File URL: https://kkgpublications.com/business-v3-i3-article-1/
    Download Restriction: no
    File URL: https://kkgpublications.com/wp-content/uploads/2018/09/IJBAS.3.10001-3.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.20469/ijbas.3.10001-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Karolina Lopacinska, 2016. "The Merger of Geely Automobile and Volvo Car Corporation as an Example of the Expansion of Chinese Capital in the Automotive Sector," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 2(6), pages 162-173.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aisyah & Adi Mursalin & Dina Octaviani, 2020. "Effect of corporate culture and work motivation of employee performance of PT. pontianak harbor," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 6(4), pages 109-116.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:apa:ijbaas:2017:p:84-91. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Professor Dr. Bahaudin G. Mujtaba (email available below). General contact details of provider: https://kkgpublications.com/business/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.