CHAPTER I

INTRODUCTION

1.1 Background

Entering the era of free trade competition. Such conditions require companies to always

develop the company's strategy in order to survive or develop more. For this reason,

companies need to develop appropriate strategies so that companies can maintain their

existence and improve their performance. The development of the company, the company

will discuss various developments and dynamic developments, depending on statistical

conditions and an increase in the process of decline or shrinkage. To grow and develop

this company can develop its business by choosing one of two alternative routes that grow

from within the company, and growth from outside the company.

Acquisition is an external growth strategy and is a fast track to get new markets or new

products that must be built from scratch (Moin, 2004). Acquisition is one of the company's

strategies to get synergy. Synergies that occur as a result of business mergers can be in

the form of decreasing average unit costs due to increased economies of scale, as well as

financial synergies which consist of increasing capital associated with improving

corporate finances.

Some of the company's motives are carried out, namely economic, strategic, diversified,

synergistic, and non-economic motives. The reason companies are more interested in

choosing acquisitions as a strategic step for internal growth is because they get a quick
way to achieve company goals. Through acquisitions, companies do not need to start from

scratch to promote new businesses. A synergy can be achieved by the company when

making an acquisition, namely the overall value of the company after the acquisition is

greater than the value of each company before the acquisition. The acquisition also

provides several benefits for the company, among others, Improving capabilities in

marketing, research, managerial skills, technology transfer, and efficiency in the form of

decreasing production costs.

In Indonesia, driven by an increasingly large capital market, more transactions and

procurement are combined. In Indonesia, the practice of public procurement is carried out

by one group specifically for companies that go public. The reason companies are merging

and acquiring is to obtain synergies, strategic opportunities, increase effectiveness, and

exploit the wrong prices in the capital market.

1.2 Problem Formulation

A. What is the purpose of the company to make acquisitions?

b. How did the company change after the acquisition?

 CHAPTER II

DISCUSSION

2.1 Definition of Acquisition

At first, the acquisition program was limited to the business community, but now people

are getting to know the acquisition. Significant changes in the business environment such

as globalization, deregulation, computer progress, and market fragmentation create

intense competition. For this reason, companies need to develop appropriate strategies so

that companies can maintain their existence and improve their performance. Companies

can develop their business by increasing production capacity, building new companies or

by buying other companies (Gunawan and Hartanti, 2005).

Acquisition is the takeover of a company by buying shares or company assets, the

remnants purchased by the company (Brealey, Myers, & Marcus, 1999, p. 598). This

acquisition is intended to enable the acquired companies to be maximized by their

resources in the interests of the main company and for the company's interests in the

acquisition. The acquired company will carry out all its activities normally but then the

responsibility is no longer the company itself, but to the acquiring company that acts as

the parent company.

2.2 Acquisition of PT Mahkota Sentosa Utama by PT Lippo Karawaci Tbk

Megaproject Meikarta is the main project of two property companies owned by Lippo

Group, namely PT Lippo Karawaci Tbk (LPKR) and PT Lippo Cikarang Tbk (LPCK).
This project is owned by PT Mahkota Sentosa. Main who is a subsidiary of LPCK. LPKR

itself controls LPCK shares up to 54%. Unmitigated, Cikarang, West Java reached Rp.

278 trillion. Lippo also moves quickly in marketing its new project.

In early 2016, the Lippo Group began the Meikarta project. Promotions and

advertisements begin with the front page of the main national print media, with an

estimated total advertising value of Rp 1.5 trillion for 2017 only. The city will be

developed on 500 hectares of land with 100 buildings with a height of 35-45 floors with

selling prices per apartment starting at Rp 127 million. The promotion of the sale of

Meikarta apartments, which was colored and frenzied by advertisements in print and

television, began to face obstacles. The construction permit for the 500 hectare project is

84.6 hectares, the rest is only land use permits. Therefore, the West Java Provincial

Government sent a letter to the Meikarta developers to delay development.

In 2017, 35% of the financing will come from Lippo internal cash, while the remaining

65% will be offered to investors and Lippo partners. Meikarta was hit by a negative

problem, namely the construction of work in the field at the end of April. The Lippo Group

management is according to plan, and the target of 32 towers can be completed by

December 2018 and the submission in March 2019 will be achieved.

On October 14, 2018, the arrest (OTT) by the Corruption Eradication Commission (KPK)

against the management of the Lippo Group and several other parties related to the

Meikarta project. Bekasi Regent Neneng Hassanah Yasin and senior Lippo Group Billy

Sindoro became suspects, with Rp. 13 billion as proof of licensing services for the

construction of an area of 84.6 hectares in Meikarta.

However, Legal Adviser PT Mahkota Sentosa Utama (MSU), Denny Indrayana,

confirmed that the development of the Meikarta Megaproject continued. This was

conveyed after the Corruption Eradication Commission (KPK) stated that the legal

process took place separately from the development process.

2.3 Purpose of acquisition

PT Lippo Cikarang Tbk (LPCK), which is the holding company of PT MSU, conducts

this collaboration to realize the area of science and technology. Meikarta is expected to

improve the quality of human resources so that economic growth can be sustained.The

CEO of Lippo Group James ensures that the Meikarta Project is expected to be a solution

to reduce Jakarta's burden in many aspects, such as traffic density, human movement,

spatial planning, and as a new economic center. Not only Jakarta. The mega project that

is being worked on by Lippo Group also has the potential to greatly reduce Bandung's

burden. This is because Meikarta is passed by the fast Jakarta-Bandung railroad track,

LRT and MRT elevated trains, Patimban Deep Sea Port, Kertajati International Airport,

and Jakarta-Cikampek Layang Toll Road. Chief Executive Officer (CEO) of Lippo Group

James Riady said, currently there are around 8 million workers who do not have a home.

One of them is because they are unable to reach higher house prices.

2.4 Change after Acquisition

The financing needs for Meikarta reach Rp. 278 trillion. LPKR and LPCK as project

owners do not have as much funds as they do not have sufficient funds. Until the end of

the third quarter of last year, LPKR's total assets were Rp. 52.4 trillion, while for LPCK
only Rp. 9.5 trillion. Even if you want to attract debt, the value is impossible to reach

hundreds of trillions to exceed the value of assets.

The developer of Meikarta, Mahkota Sentosa Utama, issued its first medium term notes

(MTN) in early October. However, the value of the first MTN issuance is very small,

which is Rp 4.8 billion. Following the birth of the Bekasi District Government corruption

case related to the Meikarta mega project. Investors seem increasingly pessimistic about

the company's performance because there is a potential for project development to be

hampered and experiencing liquidity difficulties. The share price of PT Lippo Cikarang

Tbk (LPCK) fell 13.36% to Rp 1,200 / share. Trading volume was recorded at 6.43 million

shares worth Rp 7.5 billion.

Since the beginning of the year, the cumulative share price of LPKR has fallen by 45.9%.

This year the highest price of LPCK shares is at the level of IDR 575 / share and has been

at the level of IDR 1,840 / share at the beginning of 2014.

According to the financial report of Lippo Karawaci, Lippo Cikarang, released its

ownership in Mahkota Sentosa Utama to Hasdeen Holdings. With this release, the

publisher currently controls 49.99 percent of the Crown Sentosa Utama. With the release

of shares, Lippo Cikarang generates Rp. 2.35 trillion in profits. This advantage is the

difference between the investment value of the subsidiary before losing control at PT

Mahkota Sentosa Utama, which is the developer of Meikarta. The Head of Corporate

Communication at Lippo Karawaci Danang Kemayan Jati said that the developer

company Meikarta was no longer consolidated in the second quarter of 2018. Therefore,

this project did not contribute to the company.

This change causes LPCK assets to decline and net income to soar. LPCK's net profit

jumped 487.55% to Rp 2.15 trillion from Rp366.77 billion previously. This increase in

profit comes from profits from recording investments in associated companies with fair

value reaching Rp. 2.36 trillion.

The effect of the release of Meikarta from other LPCK financial statements was a decrease

in other non-current non-financial assets of Rp.569 billion, down 67.9% from the previous

one.

CHAPTER III

CONCLUSION

3.1 Conclusions

Based on the analysis carried out, conclusions can be taken as follows:

Mergers and acquisitions carried out by the company are the company's strategy in the

development of the company, because with this strategy the company does not need to

start a new business because the company's stock business has been formed beforehand,

so the company's goals can be quickly realized. In addition, there are many other

advantages, namely increasing the company's human resources, increasing capabilities in

terms of marketing, managerial skills, research, transfer or transfer of technology, and the

efficiency of the company's production costs. and for management, choosing the right

acquisition decision, the company's stock price will be increased and will also provide
welfare for shareholders. For this problem, management will get incentives or bonuses for

acquisition decisions.