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Business Merger and Acquisition in Indonesia

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Merger and acquisition in Indonesia is expected to continue the positive trend that was observed in previous years. In 2016, Indonesia recorded 71 deals worth of USD 1.9 billion. In 2017, the amount increased significantly to USD 4 billion with 81 deals recorded. And, in 2018 69 deals were recorded with a staggering amount of USD 10 billion. Although records are impressive, it is important to note that mergers and acquisitions in Indonesia are complex processes. Thus, successful execution of both mergers and acquisitions require a significant amount of resources and time.

Merger and Acquisition: The Difference

As the name says, merging happens when two or more items become one. In business, merger takes place when two or more business entities or corporations become a single entity. The main purpose of this activity is scale and productivity efficiencies in major areas of business operations.

As for acquisition, it happens when a strong company (usually a large one) buys a smaller company (usually with weaker financial ability) in order to create a company that is cost-efficient and competitive in the market.

Reasons for Doing Merger and Acquisition in Indonesia

In general, companies that merge together are able to achieve cost efficiencies when it comes to delivering products and services, administration tasks as well as marketing and sales in business operations.

Benefits that can be enjoyed from doing mergers and acquisitions in Indonesia include improving company productivity through staffing efficiencies and market expansion through penetrating new markets that result in growing revenues.

Some of the most important regulations on merger and acquisition in Indonesia are as follows:

  • Law 40 of 2007 on Limited Liability Company
  • Government Regulation 27 of 1998 on Merger, Consolidation and Acquisition of a Limited Liability Company
  • OJK Regulation No. 9/POJK.04/2018 on Public Company Takeover
  • OJK Regulation No. 74/POJK.04/2016 on Merger or Consolidation of a Public Company
merger acquisition process in Indonesia

Procedures of Merger and Acquisition in Indonesia

In general, the procedures of mergers and acquisitions in Indonesia are summarised as follows:

  • The acquirer and the target company prepare an M&A proposal in newspapers.
  • The target company conducts an extraordinary general meeting of shareholders with the presence of at least 75% shareholders.
  • Creditors approve the proposed M&A transaction.
  • Determine the fair market value of the merger shares conversion formula through a valuation of shares.
  • Third parties (as required by law and agreements) give approval.
  • Relevant agencies (BKPM, OJK and Ministry of Law and Human Rights) approve the merging or acquired companies.
  • Any relevant industry regulator gives approval (depending on the business nature of the target company)

From a regulatory perspective, a merger or an acquisition takes at least 30 days to be successfully completed. However, it may take longer due to negotiation and due diligence processes.

The Required Documents

To acquire a company in Indonesia, the documents to be prepared include:

  • Announcement
  • GMS resolutions
  • A sale and purchase agreement
  • A deed of transfer
  • Shareholders register
  • A certificate of collective shares
  • Approval from Ministry of Law and Human Rights or other relevant agencies
  • Business Identification Number

To merge with another company in Indonesia, the documents to be prepared include:

  • A merger plan
  • Announcement
  • A deed of merger
  • Shareholders register
  • A certificate of collective shares
  • Approval from Ministry of Law and Human Rights or other relevant agencies
  • Business Identification Number
Mergers and Acquisition Indonesia - Infographic

Mergers and Acquisitions in Indonesia with Cekindo

Cekindo’s mergers and acquisitions services in Indonesia are designed to help our clients achieve their strategic goals through identification of opportunities and later seizing the most suitable and profitable ones to merge with or acquire other businesses. Our comprehensive services comprise the valuation, negotiation and completion stages, including financial audit and legal due diligence.

In order for your business to pass all processes both mergers and acquisitions effectively and in compliance with the law, entrust Cekindo as your partner. We’ll make sure you are in good hands to do this safely and comfortably.

Fill in the form below to learn more about Cekindo’s mergers and acquisitions services. Our consultants are also available offline. Visit us in one of our offices in Jakarta, Bali and Semarang. We will be happy to answer your questions.

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    Selected Testimonials

    • Tim Stewart - Photo

      I would like to acknowledge the exceptional service that PT. Cekindo Business International provided to me and my company. I needed to attend a meeting in Jakarta in October 2020 and because of the COVID-19, there were some restrictions with regard to visa application. I made the right decision by consulting with the visa team at Cekindo. The application process was expertly handled. The team ensured the visa was issued well ahead of time for my trip. I would recommend PT. Cekindo Business International to anyone looking for expert help in managing the visa application process.

      Tim Stewart
      Northern Territory Building Consultancy
    • logo-PT-Asia-Victory

      Prior to choosing Cekindo as our business partner in Indonesia, we interviewed and compared several companies. Finally, we chose to cooperate with Cekindo because of its professionalism and quality. Cekindo has assisted us in many ways, from company certification application to KITAS application and financial statement compliance to the fulfillment of other tax obligations in Indonesia. We appreciate the team’s fast response and professionalism in preparing the financial statements, among others.

      Doris Chen
      PT. Asia Victory and PT. Bigger One
    • logo Toaster

      When I joined Toaster, it was already working with Cekindo. But it’s quick to see why Toaster chose Cekindo. Cekindo has been very helpful throughout. Toaster Headquarters is based in London. Indonesian tax laws are not our specialty. Cekindo’s team has helped us to understand Indonesian tax. They are very knowledgeable and dependable, and therefore a huge asset to our company.

      Tsui-Sie Wong
      Toaster
    • logo Ohmnia

      As a new business in Indonesia, we started consulting with multiple law firms but quickly narrowed down to only Cekindo. Cekindo was recommended as one of the top firms by multiple sources in the business community. The staff at Cekindo was very responsive to our needs as a new business. The team provided consultancy and assisted our startup firm with initial business setup, licenses and permits, HR/recruitment and market research. One year since our establishment, we still consider Cekindo as our partner.

      PT Ohmnia Tenaga Surya
    • Jan Pilar - Hydropol

      When we intended to enter the Indonesian market back in 2013/14, Cekindo helped us to understand the possibilites and options for business presence in Indonesia through legal advice & also advisory on how to arrange for ownership. Furthermore, Cekindo also provides us with a range of fully professional and reliable accounting & tax services for our representative office in Indonesia. In the world of digital & virtual economy like today, it is an essential prerequisite to have the most reliable business partner like Cekindo.

      Jan Pilař
      Hydropol

    Selected Clients

    cfld
    aegisub
    acapacific
    decillion
    elite
    ezbuy
    hydropol
    innowangsa
    lekise
    ericsson
    carmudi
    onesecure
    photobook malaysia
    polyparts

    Frequently Asked Questions

    There are different types of companies in Indonesia. Should all companies refer to the same regulations when doing merger or acquisition?

    What if a company that wants to buy another company is a foreign company? Are there limitations?

    What are the most common acquisition transactions in Indonesia?

    When a merger or an acquisition is about to be disclosed to the public, are there any specific requirements?

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