Indofood Agri Resources Ltd ----------------------------------------- Upgrade to OUTPERFORM

Proposed deal value LSIP equity at US$1 bn; IFAR trading 7.3x 08E EV/EBITDA post completion EPS: ◄► TP: ▲

Haider Ali / Research Analyst / 62 21 2553 7974 / haider.ali@credit-suisse.com

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of IFAR?s proposed acquisition of a controlling stake in PT London

Sumatra Indonesia (LSIP.JK, Rp6600.00, UNDERPERFORM [V],

TP Rp5000.00).We issued a new flash report on the financial and valuation impact

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LSIP at 08E EV/EBITDA of 7.3-7.8x and 08E P/E of 11.2-11.9x,

which is at a discount to the 08E average multiples of LSIP?s

peers.The proposed transaction values LSIP equity at US$1 bn, valuing

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tender offer expected to be launched in 19 weeks (likely Oct 07)

after acquisition of the 64.4% LSIP majority shareholding.IFAR expects to complete the transaction in two phases, with the

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and 08E P/E range of 11.2-11.8, subject TO acceptance level.IFAR is trading at undemanding 08E EV/EBITDA multiple of 7.3x

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on our estimated sum-of-the-parts value, assuming a minimum of

64.4% LSIP shareholding. For details refer to our flash note, 29

May 2007. Our rating is also upgraded to OUTPERFORM from

Neutral.

IFAR announced an offer to acquire a controlling shareholding in LSIP

valuing LSIP equity at approximately US$1 bn.We have raised our TP for IFAR to S$1.55 (from S$1.35) based

Figure 1: Proposed offer structure

LSIP shareholders LSIP share under offer Offer price Cash vs. Value

(mn shares) (%) (Rp/share) share (Rp bn)

Majority group 500 37 6,500 Cash 3,251

MCN conversion 269 20 6,500 Cash 1,751

ES shares 110 8 6,500 Share 712

Sub-total 879 64 5,713

Proposed TO 486 36 6,900 Cash -

Maximum offer 1,365 100 - 3,351

Source: Company data, Credit Suisse estimates.

The transaction is proposed to be completed in two phases:

Phase I: Completion of conditional share purchase agreement. IFAR

has entered into an agreement with LSIP?s majority shareholder group

to acquire 879 mn LSIP shares at a value of Rp6,500/share,

representing a 64.4% stake in LSIP on a fully diluted basis.

Phase II: IFAR will make a tender offer (TO) for the remaining

outstanding 486 mn LSIP shares (35.6% on fully diluted basis) at a TO

price of Rp6,900/share.

Amongst others, transaction completion is conditional upon gaining

requisite shareholder and regulatory approvals, IFAR securing funding

for the proposed cash portion of the proposed acquisition and IFAR?s

completion of due diligence. Phase I is expected to be completed in

19 weeks from the agreement date of 25 May 2007.

IFAR expects to make a TO following the completion of Phase I,

possibly in Oct 2007. The following timetable is provided for illustrative

purposes based on IFAR analyst briefing and press release.