Predictions revealed for 2010 M&A trends

Economists believe that merger and acquisition (M&A) deals in 2010 will be seen mostly in consumer goods, entertainment and media, and financial services.

According to PricewaterhouseCoopers (PWC) and Thomson Reuters, the total number of M&A cases for 2009 was 295, an increase of 77 percent over 2008.

The total value of M&A cases wrapped up in 2009 was $1.138 billion, including 200 transactions among domestic companies, 90 transactions between domestic and foreign companies and five cases where domestic companies purchased or merged with foreign companies.

The outstanding M&A deals in 2009

Industrial companies carried out nearly one fourth of the total M&A deals, an increase of 15 percent over 2008. Energy companies experienced a seven percent increase over 2008 to 17 percent in 2009.

PWC notes a tendency in Vietnam’s multi-field groups to restructure organizations, reduce the number of small rivals and try to expand business to other fields through M&A deals

Ha Tien 2 Cement Company merged into Ha Tien 1 Cement Company in December, for instance, becoming one of the most outstanding M&A cases of 2009. The value of the deal was $133 million.

In November, House Foods Corporation, a leading Japanese food and drink company, agreed to invest $20 million in Masan Group Corporation by purchasing nine million shares at 40,000 dong per share. With the deal, the Japanese producer now holds 1.85 percent of the total stakes in Masan.

In October, HSBC Insurance (Asia Pacific) Holdings Limited signed an agreement to raise its stakes in Vietnam’s Bao Viet Holding from 10 percent to 18 percent, worth 1.88 trillion dong, or $105.3 million.

In July, a South Korean steelmaker purchased 90 percent of the shares in Asia Stainless Corporation, the Vietnam-based stainless steel producer and distributor, valued at $50 million.

M&A prospects for 2010

PWC believes that the number of M&A deals in 2010 will increase in all fields, following forecasts by independent analysts that the national economy will grow by six percent in 2010. PWC notes that prosperous Vietnamese enterprises are seeking suitable opportunities to purchase or merge, which will help foster their growth.

In the first week of January, the Government stated it will push up equitization of state-owned enterprises in 2010, a move that financial experts believe may lead to big-scale M&A deals.

The scheduled merger of state-owned enterprises to rationalize operations and improve competitiveness will also have considerable influence on the M&A picture in 2010.

According to the Ministry of Agriculture and Rural Development, in January, three state-owned seafood companies will merge to form the Vietnam Seafood Corporation. Seafood is Vietnam’s third largest export.

PWC believe that consumer goods, entertainment and media, finance services and real estate will be the sectors for most of M&A cases. Other business fields will also attract M&A, such as industries providing input materials for making consumer goods, as well as the garment production and retail sectors.

VietNamNet/TBKTVN

Tags: Vietnam business news, Vietnam economy news, Vietnam M&A