Mergers, acquisitions forecast to surge

Mergers and acquisitions in Viet Nam have been tipped to increase this year despite a decrease in global M&A in 2009.

In 2009, Viet Nam saw 287 mergers and acquisitions, up 71 per cent over the previous year, stated a recent report by Avalue Viet Nam, a firm that advises on mergers and acquisitions. The total value of those deals was US$1.1 billion.

By contrast, global mergers and acquisitions stood at 30,830 ($1.63 trillion), a year-on-year decrease of 10.4 per cent in quantity and 39.2 per cent in value, according to statistics obtained from Thomson Reuters.

The majority of the deals in Viet Nam were in finance, banking and industrial production, the report said French bank BNP Paribas increased its stake in Ocean Bank to 15 per cent as PetroVietnam (PVN) purchased a 20-per-cent holding in the bank, and Maritime Bank purchased 45-per cent of My Xuyen Bank.

Other significant deals included the purchase of an 18-per-cent stake in the construction giant Vinaconex Group by the military-run telco Viettel, the acquisition of the remaining 70 per cent of shares in the Viet Nam Lubricants and Chemicals Corp (Vilube) by French Motul Lubricants Group, and the acquisition of a 51-per-cent stake of Thuan Phat Foodstuff Joint Stock Co by International Consumer Products Corp (ICP).

Three of the deals in 2009 were reached over the stock exchange.

In May, Singapore’s Eland Asia Holding Pte Ltd purchased a 30- per-cent stake of HCM City–listed Thanh Cong Textile Garment Investment Trading Co (TMC). In September, PVD Invest was merged into PetroVietnam Drilling and Well Service Co (PVD) through a share swap at a conversion rate of 5.5:1.

And to finish the year off, Mirea Fiber Co cancelled their KMF listing on the Ha Noi Stock Exchange (HNX) and chose instead to convert HOSE-based KMR coded shares of Mirea Joint Stock Co at a conversion ration of 1 KMF share for 1.35 KMR shares. Newly merged KMR shares are expected to be issued by the end of February.

Looking forward, this year will see the Ha Tien 2 Cement Joint Stock Co (HT2) merge into Ha Tien 1 (HT1) on HOSE after the board of directors of both companies passed a merger plan.

In December last year, Hung Vuong Co (HVG) also approved a plan to buy AGF shares of Agifish (AGF). If the deal goes ahead, the HVG will hold over 6.5 million AGF shares (51.08 per cent of the seafood processor’s charter capital), representing the first public buy offering on the Vietnamese stock market.

This year, M&A activities in Viet Nam were predicted to surge, seeing increased activity in industrial production, telecommunications and finance and banking, said Avalue Viet Nam.

Kinh Do Joint Stock Co (KDC) has said merger and acquisition plans would be released this year for its North Kinh Do (NKD) and KDC subsidiaries, according to deputy general director Le Phung Hao.

Software giant FPT is also tipped for restructuring after its chairman, Truong Gia Binh, said the company would invest VND300 billion (US$16 million) to unify its small technology firms to increase profits and expand provision of services.

Big deals of unlisted companies are also planned for 2010, such as Viettel which is planning to spend nearly $350 million to buy stakes in two foreign telcos: Carlsberg, which will purchase the remaining 50-per- cent of charter capital of Hue brewery; and Japan’s Sapporo which will buy a 65-per-cent stake of Kronebourg Viet Nam.

State Bank explains rules on mergers, acquisitions

The Governor of the State Bank has issued a circular that gives banks, finance and leasing companies and co-operative credit institutions the right to merge, consolidate and acquire other credit institutions.

Accordingly, any deals made must comply with all licensing regulations for establishment and operation of individual bank accounts, and must continue to operate all services under supervision of the State Bank Decision No/2006/QD issued by the governor.

The circular stated that to engage in a deal, institutions must develop a proposal that is not contrary to existing laws and regulations.

A minimum level of charter capital for the new entity must be reached as stipulated by law.

VietNamNet/VNS

Tags: Mergers and acquisitions in Vietnam, Vietnam M&A