In Indonesia, a merger and acquisition (M&A) is done to stimulate growth, increase market share, influence supply chains or to gain competitive advantages. The process is performed through the consolidation of companies or assets.
M&A transactions were significantly active between 2016 and 2018. In 2016, there were 71 M&A deals in Indonesia with a total value of US$1.9 billion. In the following year in 2017, there were 81 M&A deals and the value spiked to US$4 billion. Though fewer deals are observed in 2018, a total of 69 deals, the total value saw an incredible hike at US$10 billion.
Despite the remarkable results, the merger and acquisition process is relatively complicated, requiring the use of substantial time, effort and resources.
However, Cekindo wants to make this less complex for you so that you can achieve your M&A goals. What you are going to read in this article will tell you what you need to know about post merger, acquisition and consolidation transactions in Indonesia.
M&A in Indonesia: Regulation 3/2019 from KPPU
Regulation 3/2019 on Assessment of Mergers or Consolidations of Business Entities, or Acquisition of Shares of Companies became effective on October 3, 2019, replacing Regulation No 13/2010. It was issued by the Komisi Pengawas Persaingan Usaha (KPPU) or Business Competition Supervisory Commission on October 2, 2019.
This new regulation states the requirements to notify the KPPU with regard to completed mergers, consolidations, and acquisitions of shares transactions. It also specifies the notification requirements and procedures with some major changes.
Asset Transfers in Regulation 3/2019
Previously, asset transfers were not governed by the KPPU. Currently, however, KPPU must be notified of asset transfers that fulfill the requirements under Regulation 3/2019. KPPU will then conduct an assessment to determine if the asset transfers create any business competition that is unfair or monopolistic practice.
KPPU must be notified of asset transfers that will produce one or more of the following results:
- A total combined asset value of all parties with more than IDR2,500,000,000,000
- A total combined sales value of all parties with more than IDR5,000,000,000,000
Asset or Sales Value Calculation: The New Requirements
The calculation of asset or sales value is clarified in Regulation 3/2019. The regulation stipulates that the calculation is only valid when the asset or the sales value of the current year is lower than the year before. Also, if a company has only been operating for not more than three years, the calculation of asset value or shares is done based on the last two years’ assets or sales value average.
Post-Transaction Notification Forms Is in New Format
Now, according to Regulation 3/2019, there’s a guideline summary on how to fill out the post-transaction notification forms.
Information regarding the consumers, suppliers, and competitors are classified as additional information. You will only need to fill out this additional information when requested by KPPU, and they may not be necessary for the assessment.
Reporting Obligations of Transactions outside Indonesia
It is compulsory to notify KPPU for all mergers, acquisitions and consolidations conducted outside Indonesia under Regulation 3/2019.
How Cekindo can Assist
Acquiring the right business partner can be a difficult task. Many of the merger and acquisition (M&A), especially the post merger, acquisition and consolidation transactions do not succeed to get the results that were initially envisioned.
Cekindo’s M&A professionals in Indonesia with experience and various backgrounds in corporate finance, value strategy and deals, incorporate their expertise and knowledge to help you maximise the transaction value.
We are a leading M&A services provider in Indonesia that assists our clients in all aspects of M&A transactions including post merger, acquisition and consolidation transaction, and due diligence.
Now you can be better positioned with the assistance from Cekindo to minimise your M&A risks and expedite your deals.
Furthermore, you will be able to grasp and deliver value to your stakeholders and achieve in-organic growth rapidly. Our M&A professionals are ever ready to serve you in your successful M&A strategies.
Get in touch with us to discuss more by filling in the form below.