Indonesian Herbal Medicine Firm Sido Muncul Considers Stake Sale Amid Strategic Review

The Hidayat family, which owns about 78% of Sido Muncul, Indonesia's largest herbal medicine company, is considering a stake sale to bring in a strategic investor. Sido Muncul Commissioner Venancia Sri Indrijati Wijono said the family is open to discussions that could value the company at about $1 billion. The talks are still in early stages, and the family is not rushing to finalize any deal.

Sido Muncul is best known for its Tolak Angin herbal remedy for colds and fevers. The company went public in 2013 and has since expanded its presence in the herbal and pharmaceutical sectors. The Hidayat family recently acquired the remaining 17.1% stake from Affinity Equity Partners in a $233 million deal in 2024.

The company's shares have declined by about 8.5% over the past 12 months, giving it a market value of 16.2 trillion rupiah ($960 million). The stock performance has not reflected the company's long-term potential, according to some investors.

Why the Move Happened

The Hidayat family is exploring options to bring in a strategic investor that can help take the business to a higher level. The family is currently in talks with banks and potential investors, although no final decisions have been made.

Sido Muncul's performance has been a concern for some time. The company has faced challenges in maintaining strong growth despite its dominant position in the herbal medicine market. A potential stake sale could help address these challenges by introducing new capital and strategic direction.

The family has emphasized that the focus is on improving performance before moving forward with any formal transaction. This indicates that the family is not under pressure to sell but is considering strategic options to enhance the company's value.

How Markets Responded

The market has not shown a strong reaction to the news of a potential stake sale. Sido Muncul's stock has continued to trade at a discount to its intrinsic value, despite its leading position in the Indonesian herbal medicine sector.

The company's market capitalization of 16.2 trillion rupiah ($960 million) suggests that investors are not fully valuing its potential. The proposed stake sale could change this dynamic by attracting new institutional interest.

Some analysts believe that a stake sale could signal confidence in the company's long-term strategy. It could also provide a benchmark for the company's value in a competitive market.

What Analysts Are Watching

Investors and analysts are watching to see whether a stake sale will materialize and who the potential buyer might be. The identity of the buyer could influence how the market views Sido Muncul's future.

The size of the stake being sold is also a key factor. A small stake might not significantly impact the company's ownership structure, while a larger stake could signal a major shift in the company's direction.

Analysts are also monitoring how the company performs in the coming months. Strong operational improvements could strengthen the case for a stake sale, while continued underperformance might delay any transaction.

The potential for a stake sale highlights the evolving landscape for Indonesian pharmaceutical companies. As the market becomes more competitive, strategic partnerships and capital injections are becoming more common.