Mergers, acquisitions boom hits stocks

The stock market has of late seen several listed companies making public purchase offers to become major shareholders in other listed companies.

Seafood firm Hung Vuong Group (HVG) is in the process to acquire additional shares in the basa processing firm AGF to hold a 51 per cent stake in the latter. HVG, with a charter capital of VND600 billion (US$32 million), plans to purchase 3.75 million AGF shares between February 13 and March 20.

HVG chairman Duong Van Minh said his company already owns a 22 per cent stake in AGF, so the increase would help both firms take advantage of each other’s expertise for mutual benefit. For example, cold storage facilities of HVG and production facilities of AGF, both of which are running under capacity, can complement each other towards increased efficiency.

Meanwhile, the Sai Gon Fuel Company (FSC) has announced that the Phu Nhuan Jewellery Company (PNJ) would acquire 2.1 million of its shares between March 8 and April 15, or a 26 per cent stake in the fuel business. Currently PNJ has over 1.85 million SFC shares, or around 23 per cent. Reason: PNJ also has a petroleum trading affiliate and the purchase will help expand its distribution network and enable it to enter the real estate business through SFC.

The Viet Nam Century Fund managed by the French group Jaccar recently signed a contract for investing $12 million in the Tra Vinh province-based Mylan Group. The investment – which would fund a new chemical plant, a opto-electronic materials company and several other development plans for Mylan – would give the fund a 30 per cent stake in the group, which has a charter capital of VND80 billion ($4.1 million).

Mylan Group chairman Nguyen Thanh My said Jaccar would assist the group with corporate restructuring and governance, as well as formulating development strategy. He also expects to list the company on the stock exchange in 2011 or 2012.

A recent, big deal outside Viet Nam is also worth mentioning because both parties have business in the country. The UK’s life insurance group Prudential bought the US-based AIG life insurer AIA, which mainly operates in Asia, for $35.5 billion.

The busy merger and acquisition activities are happening as anticipated by auditing and consultancy firm PricewaterhouseCoopers in its recently released report on this market. It said a continued growth in M&E activity was expected this year as growing Vietnamese corporations look for targets in which to invest their cash surpluses and facilitate further growth.

It also said many investment funds still have cash available to invest whilst regional and global fund managers would be focussing greater attention on Viet Nam due to its economic performance and prospects.

Tags: vietnam securities, vietnam stock, vietnam stock exchange, vietnam Stock exchanges, Vietnam stock market, Vietnam stock market 2010