Foreign hands on M&A deals

Foreign driven mergers and acquisitions are becoming a common landmark in Vietnam’s business landscape.

The trend was underlined by Chinese-backed Haier Group Corporation swooping for Japanese-backed Sanyo Electric Group’s businesses.

Haier and Sanyo have inked a memorandum of understanding on Haier’s acquisition of Sanyo’s refrigerator, washing machine, and other electrical-appliance businesses in Vietnam and other nations.

Negotiations for the deal were kicked-off in March, 2011.

“The two sides are expected to clinch a formal agreement at the end of September,” said Haier’s vice president Du Jingguo.

“Haier aims to become the world’s leader in electrical-appliance businesses. The acquisition is part of Haier’s strategy to continue to expand its overseas strategy,” Jingguo said.

Haier did not disclose the value of the transaction. However, foreign media said the transaction was worth  $130 million.

After completion of the transaction Haier, which occupied 10.8 per cent of the world’s refrigerator market in 2010, would apply dual-brands “Haier” and “Aqua” in Japan, while using the “Haier” brand in Vietnam, Indonesia, the Philippines and Malaysia. Besides, Haier would also use the “Sanyo” brand in these markets within a specified period.

Dang Thanh Tam, chairman of Saigon Invest Group  – which last year bought a Swiss clock making firm, told VIR that this transaction was one of many other potential foreign merger and acquisition (M&A) deals in Vietnam.

“M&A foreign-related deals will be booming during 2011-2015 in Vietnam. M&As can help enterprises develop better and improve their competitiveness.

“Not only Vietnamese firms, but also many foreign-backed firms in Vietnam are being targeted by foreign firms overseas as potential lucrative transactions,” he said.

For example, South Korea’s CJ-CGV Company recently trumpeted that it would pay $73.6 million to become the largest cinema operator in Vietnam.

The company was buying a controlling 92 per cent stake in Virgin Islands-registered Envoy Media Partners, which in turn owns 80 per cent of Megastar Media Company (MegaStar), Vietnam’s leading exhibition circuit. Other shares are owned by local Vietnamese publisher Phuong Nam Corporation.

The acquisition means that the majority of high-end Vietnamese cinemas will soon be under Korean ownership. However,  MegaStar said more information about the acquisition would be announced this month.

In another case, TNK-BP Holding, a Russian-UK joint venture, purchased a 35 per cent stake in an offshore natural gas block belonging to Ho Chi Minh City-based UK-backed BP Plc. for $1.8 billion.

PricewaterhouseCoopers said M&As were an efficient way for foreign investors to access the Vietnamese market.

The European Chamber of Commerce (EuroCham) in Vietnam said the manufacturing sector would see many M&As, while the banking-finance and insurance sectors would be potential growth areas for M&A due to higher capitalisation requirements. Consumer goods businesses were also ripe for buying into due to robust domestic goods consumption and a growing middle-class.

Additionally, M&As in the infrastructure sector were expected to massively increase because of Vietnam’s huge appetite for investment capital in the areas of power supply, bridges, roads, and air- and seaport projects. – VIR

Tags: Vietnam M&A