The Hong Kong conglomerate said that it would jointly acquire, with Nissin Food Products Co, a 60-per cent stake in Indonesian instant noodle maker Indofood for $570 million from the Salim family and associated investors.

First Pacific's $285 million portion of the deal would be funded through the issue of $135 million worth of new shares and $150 million in cash which would be paid by June 30, 1999.

The cash payment could be extended to September 30, 1999.

"They are getting a reasonably solid business but there are high risks associated with it," said Robert Sassoon, head of research at SG Securities.

He pointed to Indofood's $1 billion of debt, the political and economic climate in Indonesia and planned anti-monopoly laws which would affect Indofood with itsvast market share.

First Pacific said it had paid the equivalent of Tuesday's 3,950 rupiah closing price for Indofood shares and the acquisition would be immediately earnings enhancing.

Nissin would bring its food manufacturing knowledge to the venture and its presence would help massage fears that First Pacific was bailing out its largest single shareholder, the Salim family in Indonesia, said Lehman Brothers analyst Philip Tulk.

"First Pacific is a company that has been successful in managing consumer products and distribution companies so they should help Indofood grow its regional distribution," he said.

Looking out 18 months to two years, the economic situation in Indonesia would have improved greatly and the price paid for Indofood would likely be considered very attractive, said Tulk.

"When you consider that Indofood is trading at a fifth of its all-time high value, that is a bombed out company and there are some very good businesses inside there," he said.

But the recession in the regionwas not over yet, said Robert Rountree, managing director Asia-Pacific research at Prudential Bache Securities. "You are going to find that a lot of these markets are going to fall back," he said.

Sassoon said it was possible Indofood would not pay a dividend for 1998, 1999 and 2000. "So basically there is no cash return at all from Indofood but in strategic terms First Pacific is managing a company and will have access to the cash," he said.

Analysts said the deal was likely to be followed by asset sales, with First Pacific's cellular operations in Taiwan and First Pacific Bank Ltd Prime candidiates.

"They have to come up with $150 million in cash by June 30," noted Scott Benesch at Bear Stearns Asia.

But following First Pacific's $749 million investment in Philippine Long Distance Telephone Co, he said the conglomerate had a portfolio of solid core businesses.

"They have made two major acquisitions, both in businesses they know fairly well and both in businesses that have tremendous marketdominance in their markets," said Benesch.

Tulk, who had an outperform rating on First Pacific, saw the stock rising on Thursday.

"I like these shares. I like the management of First Pacific. They have laid out a very clear strategy and they are adhering to it and that is the kind of corporate vision and execution that investors like," he said.