Introduction
Indonesia, with a population exceeding 260 million, boasts the largest population in ASEAN and is home to the world's largest Muslim population. In recent years, the influx of investment funds from Western venture capital firms has transformed Indonesia into a startup powerhouse, hosting unicorn companies like Gojek, Tokopedia, and Traveloka (unicorns generally refer to unlisted companies valued at over $1 billion within 10 years of establishment).
This article examines the landscape of cross-border M&A by Japanese companies targeting Indonesia, highlighting five recent cases and analyzing industry trends and practical movements revealed by these cases.
Case 1: Dentsu Acquires Indonesian Digital Marketing Company (December 2017)
【Overview】
Dentsu agreed to acquire all shares of ValueClick, a leading digital marketing company in Indonesia. Founded in 2012, ValueClick offers services in SEM (Search Engine Marketing) and SEO (Search Engine Optimization). Dentsu acquired the shares through its overseas business unit, Dentsu Aegis Network, and plans to restructure by merging ValueClick with existing digital performance-related sites in Indonesia.
【Perspective】
In highly innovative industries like digital marketing, acquiring talent is key. "Acqui-hiring" is a common M&A strategy aimed at acquiring skilled personnel. Tapping into the talent pool in emerging markets like Indonesia for SEM and SEO expertise offers a more immediate and reliable solution than recruiting and training from scratch. Dentsu, already present in Indonesia, used this acquisition to scale up by integrating ValueClick with its local operations, leveraging existing market knowledge and infrastructure.
Case 2: Japan Tobacco Acquires Indonesian Tobacco Companies (August 2017)
【Overview】
Japan Tobacco (JT) agreed to acquire all shares of PT. Karyadibya Mahardhika (annual sales approximately 56 billion yen) and its distribution company PT. Surya Mustika Nusantara (annual sales approximately 47.6 billion yen). Indonesia is the world's second-largest tobacco market, dominated by clove-infused kretek cigarettes, which account for about 94% of the market. This acquisition, valued at approximately 110 billion yen, aims to expand JT's presence in the kretek segment.
【Perspective】
With a population of 260 million, Indonesia's vast and growing consumer market is pivotal for future Asian strategies. The prevalence of kretek cigarettes presents a unique opportunity. JT's acquisition demonstrates a significant step in leveraging local expertise and expanding its market share in a culturally entrenched smoking industry.
Case 3: Kyoei Printing Acquires Indonesian Laminate Tube Manufacturer (April 2017)
【Overview】
Kyoei Printing decided to acquire additional shares in its equity-method affiliate PT Arisu Graphic Prima (annual sales approximately 577 million yen), raising its ownership from 23.4% to 96.2%. Kyoei aims to expand its cosmetics laminate tube business, anticipating increased demand for high-quality tube containers in Southeast Asia.
【Perspective】
Growth in consumer markets also drives demand for related materials, such as packaging. This M&A targets the expected rise in demand for high-quality packaging products, driven by increased personal consumption and rising income levels. This trend of seeking high-value products is evident globally, and this transaction aligns with those growth expectations.
Case 4: Hokkan Holdings Acquires Beverage Packaging Manufacturing Business from DELTAPACK (October 2018)
【Overview】
Hokkan Holdings decided to acquire the beverage packaging manufacturing business from PT. DELTAPACK INDUSTRI (DPI, South Cikarang, Bekasi Regency). The new subsidiary, PT. HOKKAN DELTAPACK, will take over the business, with DPI retaining a 20% stake. The acquisition cost is approximately 9.5 billion yen.
【Perspective】
By establishing a new subsidiary to inherit the business, Hokkan mitigates risks associated with inheriting off-balance sheet liabilities. This method of business transfer rather than stock acquisition ensures a smoother transition and continuity, with the former owners retaining a stake to support ongoing management.
Case 5: Noda Acquires Indonesian Building Materials Company SIWI (January 2018)
【Overview】
Noda decided to acquire all shares of PT. Sura Indah Wood Industries (SIWI), an equity-method affiliate, raising its stake from 49.58% to 100%. SIWI, established in 1990, manufactures interior building materials for the Japanese market using Indonesian wood resources. The acquisition follows BIL's decision to withdraw from wood processing.
【Perspective】
Entering foreign markets through joint ventures is common to gain market insights and operational experience. Noda’s full acquisition of SIWI allows it to leverage the local network and market knowledge accumulated over 20 years, ensuring a strong foundation for future expansion.
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Thank you for reading until the end.
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