KONTAN.CO.ID - JAKARTA. One of Indonesia’s biggest tycoons, Anthoni Salim, risks a rare setback if a $3 billion deal between companies he controls is rejected by shareholders on Friday.

Three investors in Hong Kong-listed First Pacific told Reuters they are critical of the price for the deal, which would see its subsidiary Indofood CBP (ICBP), best known for the Indomie noodle brand, buy Pinehill, one of Indomie's distributors and manufacturers, for $3 billion.

Salim, Indonesia's sixth-richest man according to Forbes, owns 51% of Pinehill and also holds 44.3% of First Pacific's shares, according to corporate filings. ICBP's 2019 annual report says Salim controls First Pacific.

Under Hong Kong related-party rules, he and his associates do not count as independent and cannot vote on Friday. The deal needs a simple majority to pass.

"I think it will be a challenge to have this approved," said Gerardo Zamorano, a director at Brandes Investment Group, which owns 8% of First Pacific.

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"From a strategic perspective we believe Pinehill is an attractive asset ... But you have a question of valuation, and then you have a question of process and governance, which at the Indonesian level we think there is room for improvement."

Zamorano declined to say how Brandes would vote, citing compliance rules.

Another U.S.-based First Pacific shareholder said the deal over-valued Pinehill by as much as $1 billion partly because it compared valuations with more valuable Southeast Asian companies as well as from the Middle East and Africa, where Pinehill primarily operates.

The shareholder declined to be identified because of the sensitivity of the situation.

Influential proxy adviser ISS said there were "some merits" to the deal but advised First Pacific shareholders to vote it down, saying Indonesia's weaker voting rules would "amplify the interest of related parties over the transaction."

Editor: Yudho Winarto