Cross-border MA Deals in Vietnam

Cross-border MA Deals in VietnamThe period from 1995 to 2006There were few MA from TNCs from 1995 to 2006. In this period the legal governing body in Vietnam had almost no specific provisions for MA, however, until 2006 there were 29 cross-border deals with a total tax of 196 bomberion dollars. Those activities was performed on a small scale. A remarkable transaction in this period is when Colgate-Palmolive purchased Son Hai LLC, which owned Da Lan a famous toothpaste brand name in Vietnam at that time, at three million US dollars (Nguyen 2012). At that moment Da Lan maintained about 30 percent of Vietnam toothpaste food market place partake.However, in 2005 MA market in Vietnam was marked by the introduction of the Enterprise Law including provisions on mergers and acquisitions. In addition, the equitization of State enterprises has been adopted by the Government. Subsequently, other documents such as the 2005 Law on Investment and the 2006 Securities Law also encouraged MA f rom TNCs.The grade 20072007 was a class of tremendous growth of MA from TNCs in Vietnam. This is the category after Vietnam joined WTO, and the country had to fulfil its international commitments and improved the investment environment by reforming the legal system and remote investment policies. Consequently, that event attracted contrary investors to Vietnam MA market. The evidence is that the number and take account of MA deals by TNCs in 2007 increased 700 and 1400 percent respectively compared with the previous grade. These number marked a crook point in Vietnam MA market.The year 2008There were some events, which affected cross-border MA market, occurred in 2008. Government decree 139, which became effective on 1 January 2008, clay in force. The decree in principle removed limits on overseas ownership ratios in Vietnamese companies except in relation to public listed companies where the 49 percent cap remained in place (along with a 40 percent cap in public non-list ed companies). In addition, sector specific limitations, most imembrasureantly in telecoms, pecuniary serves and other services remained in place. In addition, one of the most significant regulatory developments in 2008 arising from WTO membership obligations was the granting of licenses to wholly foreign owned banks. The first recipients of such licenses were HSBC, Standard Chartered and ANZ Bank.The number of MA from TNCs in 2008 was 30, increased about 200 percent compared with the number in 2007. The judge of all cross-border MA deals was US$ 859 million, increased about 200 percent with the number in the previous year.Notable cross-border MA deals in 2008 includedIn July, Jardine Cycle Carriage trammel (JCC) proclaimed that it had dond a 12 percent interest in Truong Hai Auto breadbasket (THACO), a leading Vietnamese self-propelled company, for a cost of approximately $41 million. In August, JCC acquired a further 8 percent post for US$ 39 million. THACO was establis hed in Vietnam in 1997 and incorporated as a joint stock company in 2007. THACOs principal activities include the manufacture, assembly, distribution, retail, repair and maintenance of commercial and passenger vehicles in Vietnam under the Kia, Foton, King Long, Hyundai and THACO brands. The company operates through a network of showrooms and dealers throughout the country. Under the agreement, the Singapore-based company will help THACO promote its automobile sales in Vietnam and other markets in the region.In August, Frances Socit Gnrale, which has had representative offices in Hanoi and Ho Chi Minh City since 1989 and is amongst the market leaders in Project and Export Finance in Vietnam, announced the acquisition of 15 percent of Southeast Asia Bank (SeABank). It is understood that Socit Gnrale may rise its holding to 20 percent in the future, the maximum allowable under the stream regulations. Financial terms of the deal were non disclosed. Headquartered in Hanoi, SeABank has a network of 55 branches and transaction offices covering Vietnams principal economic centers. Socit Gnrale committed to provide technical assistance to SeABank particularly in the fields of risk management, technology, and international payment services and to strengthen its retail banking product offerings.In August, HSBC became the first foreign bank in Vietnam authorized to hold a 20 percent interest in a domestic bank by increasing its military post in the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) from 14.4 percent to 20 percent.Also in August, in a deal valued at approximately US$ 9.1 million, Daikin Industries Ltd. Of lacquer bought Viet Kim Co., a Ho Chi Minh City-based air conditioner distributor.In October, the Asian operating arm of Bunge Limited announced its acquisition of a 50 percent interest in the owner/operator of Phu My Port. The investment provides Bunge with greater opportunities to serve its customers in the growing market for agric ultural commodities in Vietnam. The port is located on the Thi Vai River, approximately 70 kilometers from Ho Chi Minh City and is near a large number of commercial provender mills. Phu My Port is the exclusively commercial dry bulk port in Vietnam capable of receiving large, Panamax-class ships. According to Bunge, market forecasts call for aggregate volumes of soybean meal, corn and wheat imports to increase by approximately 10 percent per year over the next five years.United Overseas Bank (UOB), incorporated in Singapore, announced an increase in its shareholding in The Southern Commercial Joint Stock Bank of Vietnam (Southern Bank) from 10 percent to 15 percent in October 2008. The deal value was US$ 15.6 million. UOB purchased its initial 10 percent stake in January 2007 and pledged to provide technical assistance to Southern Bank as part of the agreement.Also in October, Nippon firebrand Corp signed a memorandum of understanding to acquire a 10 percent to 20 percent stake i n POSCO-Vietnam Co. Ltd., a cold-rolled mill manufacturer and a wholly owned unit of POSCO Co. Ltd., of Korea. A plant owned by POSCO-Vietnam Co. Ltd, which is under construction in the south of the country, has an investment value of approximately US$ 530 million and is expected to start production in September 2009.In December, TBWA Worldwide announced the acquisition of a significant shareholding in biz Solutions, one of the leading integrated marketing communications agencies in Vietnam. TBWA is committed to bring its global integrated marketing brand Tequila to Vietnam by rebranding Biz Solutions as Biz Tequila. TBWA indicated that the acquisition is part of a long-term investment program in Vietnam in anticipation of significant future growth in the country.In another notable deal in December 2008, Watson Wyatt Worldwide Inc., a global consulting firm, announced that it had acquired SMART Human Resource Vietnam Company Limited (SMART HR), an HR consulting firm. By establishin g its operations in Vietnam through this acquisition, Watson Wyatt is aiming to provide its global and regional clients with consulting advice in what it considers one of Asias most dynamic emerging markets.The year 2009Although the number of MA from TNCs continuously increased about 17 percent, their value decreased sharply over 70 percent compared with 2008. The most notable cross-border deals announced during the year wereIn October, HSBC indemnification (Asia Pacific) Holdings Limited (HSBC) signed an agreement to increase its shareholding in Bao Viet Holdings, Vietnams leading insurance and financial services group, to 18 percent from the incumbent level of 10 percent for a consideration of VND1.88 trillion (approximately US$105.3 million). A total of 53,682,474 new shares will be issued to HSBC through a orphic placement to increase HSBCs stake. As part of the original agreement, HSBC continues to hold certain pre-emptive rights allowing it to acquire shares currently owned by the Ministry of Finance with a maximum permitted HSBC shareholding of 25 percent in the five years from signing of the agreement and at prevailing foreign ownership limits thereafter.In October, Taipei Fubon Commercial Bank Co Ltd, a Taiwan based provider of commercial banking services and a subsidiary of Fubon Financial Holding Company Ltd, a listed Taiwan based financial services company, acquired the Vietnamese branches of Chinfon Commercial Bank Co Ltd, a Taiwan based commercial bank and a subsidiary of Central Deposit Insurance Corporation, a Taiwan based deposit insurance company, for a consideration of US$ 78.1 million.In November, a leading Japanese nutriment and beverage company, home base Foods Corporation ( kinsfolk Foods), signed an agreement to make an investment of approximately US$20 million in Masan Group Corporation by acquiring 9 million new ordinary shares at a price of approximately VND40,000 per share, representing a stake of around 1.85 percent of the Gro ups enlarged share capital. The transaction valued Masan Group Corporation at over US$1 billion. Companies that Masan Group owns and in which it invests include Masan Food Corporation, one of Vietnams largest food and beverage companies, and Techcombank, a leading Joint Stock Commercial Bank in which HSBC is a strategic partner. Masan Food Corporation, established in 2003, holds a market share of approximately 50 percent in some of Vietnams most popular food product subsectors, including fish sauce and soy sauce. House Foods, founded in 1913 and listed on both the Tokyo and Osaka Stock Exchanges since 1971, is one of the largest food and beverage players in Japan with a dominant position in the dress category.In July, POSCO, a listed South Korea based steel manufacturer agreed to acquire a 90 percent stake in Asia Stainless Corporation (ASC), a Vietnam based manufacturer of stainless steel, for an estimated consideration of US$50 million. With a current annual capacity of 30,000 to ns, ASC (located near Ho Chi Minh City) has plans to pass its production capacity to 85,000 tons per annum by 2010.In December, Sapporo Holdings Limited, a listed Japanese company with interests in alcoholic beverages, soft drinks, restaurants and genuine estate, agreed to acquire Kronenbourg Vietnam Limited, a Vietnam based producer of beer, from Vietnam National Tobacco Corporation (Vinataba), a Vietnam based company engaged in manufacturing and production of tobacco and cigarettes, and Carlsberg Breweries A/S for a consideration of US$ 25.4million. Under the terms of the agreement, Sapporo acquired a 50 percent stake from Carlsberg Breweries A/S and a further 15 percent stake from Vinataba. The remaining 35 percent stake will continue to be held by Vinataba. Upon completion of the transaction, Kronenbourg Vietnam Limited will be renamed Sapporo Vietnam Limited.The year 2010In this year both the number and value of MA from TNCs decreased and fall to the bottom during the period from 2007 to 2011. While the number cut about 8,5 percent the value diminished significantly 60 percent. The most notable cross-border deals announced during the year wereState-owned Oman Investment Fund acquired a 12.6% stake, or 20.208 million ordinary shares, in Hanoibased Petrovietnam Insurance JSC, a unit of state-owned Vietnam National Oil Gas Group (PetroVietnam), for VND40,000 (US$2.12) per share, or a total value of VND808.3 billion (US$42.84 million).Gamuda Land Sdn Bhd, a wholly-owned unit of Gamuda Bhd of Malaysia, agreed to acquire a 60% interest in Sai Gon Thuong Tin Tan Thang Investment Real Estate JSC, a Ho Chi Minh City based real estate development firm majority owned by Sai Gon Thuong Tin Real Estate JSC (Sacomreal), from Sacomreal for VND 23,889 (US$1.29) per share, or a total value of VND 1.533 trillion (US$82.8 million) in cash.Fullerton Financial Holdings Pte Ltd of Singapore acquired a 15% stake, in Mekong Development Joint Stock Commercial Bank, a Long Xuy en-based bank for an undisclosed amount.Orix Corporation of Japan acquired a 25% stake, or 11.408 million ordinary shares in Indochina Capital Vietnam Holdings Ltd, a real estate fund manager and provider of financial services, in a privately negotiated transaction.Commonwealth Bank of Australia, acquired a 15% stake in Vietnam International Commercial Joint Stock Bank (VIB). Whilst information on pricing of this transaction was not made public, this is likely to be one largest deal in terms of deal size since VIB is one of the largest private banks in Vietnam.TNK-BP Holding of Russia, a 5050 joint venture between BP PLC (BP) and Alfa Group Consortium, agreed to acquire a 35% stake in an offshore natural gas block belonging to BP Plc. Concurrently, TNK-BP agreed to acquire a 32.7% stake in the Nam Con Son Pipeline and Terminal and 33.3% stake in Phi My 3 BOT Power Co Ltd. These transactions were part of a larger overall transaction estimated to have a combined value of US$1.8 billi on.The year 2011The cross-border MA market showed a sign of recovery in 2011 while both the number and value of cross-border MA deals reached higher levels than the year 2008. The number and value increased 35 percent and 1100 percent respectively compared with the previous year.Notable cross-border MA deals in 2011 includedC.P Pokphand, Chinas leading animal feed producer bought 70.8 % stake in C.P Vietnam Livestock Co, 100% owned by Thai Charoen Pokphand Group and one of the leading livestock and seafood companies in Vietnam, for $609 million to bind Vietnam market. C.P Vietnam, established in 1993, holds a 20% of animal feed market share, 77% of industrial pig farming market and 30% of chicken meridian in Vietnam. Holding 70.8% stake in C.P Vietnam is a good opportunity for C.P. Pokphand Co to create an animal feed supply channel from Vietnam and make doctor on the prices.VimpelCom fagged $196 million to raise its stake in Gtel- alert to 49%, to increase its controlling powe r and actively manage Beeline after 1 year of poor performance. Gtel- Mobile is the developer of Beeline system worth $670 million of which 40% is owned by Vimpelcom and 60% by Gtel. After 1 year of operation, Gtel- Mobile had only 200,000 subscribers compared with the target of 1 million. Vimpelcom decided to pay $196 million to raise its stake in GTel Mobile by 9% to 49% and became Beeline controlling party.Unicharm Corp. acquired a 95% stake of Diana Joint Stock Co for $128 million. Diana currently holds 30% disposable diaper and 40% toilet paper in Vietnam. Unicharm, a Japanese producer of similar goods, targeted to invest in technology and expand production to become the biggest company in Vietnam in disposable diaper and toilet paper. The current market leader in the industry is 100% American owned Kimberly-Clark Co. Unicharm has 25% market share in the Asian but had not appeared in Vietnam before the deal. Diana is a family-run company and the divestment worth $128 million af ter 15 years from establishment was a remarkable investment.CJ CGV spent $73.6 million acquiring 80% Megastar Media Company (Megastar), Vietnams leading cinema owner and film distributor with 300% annual revenue growth. The Seoul-based CJ-CGV Ltd, an operator of 75 multiplex movie theatres with 610 screens in Korea, a multiplex in Koreantown Los Angeles and five others in China, bought 80% stake of Megastar through acquiring 92% stake in Virgin Islands-registered Envoy Media Partners. Buying Megastar was a part of CJ-CGVs strategy to expand operation in Vietnam and India. The group planned to spend $23 million in expanding Megastar screen system in Vietnam. This was considered a good deal for CJ-CGV to enter Vietnams entertainment market with high growth rate in recent years.Fortis Healthcare International spent $64 million to buy 65% stake in Vietnams Hoan My Medical Corp with nearly 1000 beds. This was the Fortis Healthcare Internationals sixth investment in Asia in the past eight months and an important step in consolidating its comprehensive healthcare service in Asia- Pacific. Besides getting support in technology, technique and management skills from Fortis Healthcare International, Hoan My can take advantage of its size and prestige to sustainably develop through improving service quality.Marico, a leading consumer and service firm in India, bought 85% stake of International Consumer Products (ICP) for $62 million. Marico is one of the top consumer goods firms in India with annual revenue of $600 million, focusing on beauty and health products. ICP, founded in 2001, has flagship brands such as X-men and Lovite and generated $25 million revenue in 2010 with average CAGR growth of 23% in the past three years.Jollibee Foods bought 49% stake in Viet Thai International (VTI) which owns Highlands Coffee chain. The agreement included VTIs transferring 60% of its business in Hong Kong (the owner of Hard Rock Caf) to Jollibee Foods and getting a $35 million loa n from Jollibee Foods with an interest rate of 5% p.a., due in 2016. After the deal, the joint venture was expected to own 139 stores including 118 ones in Vietnam and 21 in other 5 countries