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

DOI

10.2991/icbmr-18.2019.49How to use a DOI?

Keywords

PGN, Pertagas, holding, discounted cash flow, synergy value

Abstract

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.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Lutfi Benarto
AU  - Edward Tanujaya
PY  - 2019/03
DA  - 2019/03
TI  - Does the forced marriage have a fair start? Acquisition Valuation in the Oil and Gas Holding Company Indonesian State-Owned Enterprise-A Case Study
BT  - Proceedings of the 12th International Conference on Business and Management Research (ICBMR 2018)
PB  - Atlantis Press
SP  - 301
EP  - 307
SN  - 2352-5428
UR  - https://doi.org/10.2991/icbmr-18.2019.49
DO  - 10.2991/icbmr-18.2019.49
ID  - Benarto2019/03
ER  -