Does the forced marriage have a fair start? Acquisition Valuation in the Oil and Gas Holding Company Indonesian State-Owned Enterprise-A Case Study

摘要

Indonesia's gas market will continue to expand to support the growing economy. The country's gas demand is expected to increase by another 1,600 mmcfd from 2017, reaching 5,100 mmcfd in 2035 (Wood McKenzie Report 2017). The establishment of an oil and gas holding company by the Ministry of State-Owned Enterprises is considered as one way to avoid duplication of natural gas downstream management of two major players: PT PGN Tbk and PT Pertagas. This review aims to analyze all financial aspects related to the acquisition plan to address the investors' concerns. We use a discounted cash flow method; company comparable analysis is used for the valuation with sensitivity analysis to gas price in the growth projection. Value of the synergy is obtained by value of the combined firm (with synergy) minus the value of the combined firm (with no synergy). Our conclusion is the acquisition will generate a synergy of 1.03 Billion USD and the value of Pertagas is between 1.16 - 1.23 Billion USD without the synergy effect.