Who are the buyers in M&A deals?

Mar 4th at 16:28

04-03-2013 16:28:22+07:00

Foreign enterprises were believed to be the only investors financially capable enough to take over businesses in merger and acquisition (M&A) deals. However, experts believe that Vietnamese businesses have become powerful enough to become the buyers in the deals.

In most of the M&A cases taking place in the last five years, the buyers were foreign investors. Unicharm, for example, bought Diana, Jolibeer bought Highlands café, Carlsberg bought Hue brewery, Fortis bought Hoan My stakes.

The history of the merger and acquisition deals has witnessed the “perdition” of many Vietnamese well-known brands, after the companies were bought by the foreign investors. Worries have been raised that more and more Vietnamese brands would fall into the hands of foreign giants.

However, analysts have noted that a lot of Vietnamese businesses have become powerful enough to become the buyers in the M&A deals, which raise a high hope that Vietnamese brands would be preserved and developed.

There is a growing tendency that Vietnamese businesses with strong financial capability and good corporate governance want to buy other businesses in order to upgrade their capability and improve the competitiveness.

The Hung Vuong Seafood Company, for example, has bought a series of enterprises in the same business fields, such as Viet Thang, An Giang Fish, Sao Ta Food and Ben Tre Seafood.

The Ben Tre seafood company, which incurred loss for two consecutive years, was bought by Hung Vuong which aims to turn Ben Tre a material supplier.

The most redoubtable rival of Hung Vuong is CP Vietnam, invested by CP, one of the most powerful economic groups in Thailand.

Another big guy, BTA, also reportedly bought the stakes of many domestic construction companies such as Beton 6, Descon, Coteccons, in order to improve their strength in the competition with international groups like Gammon, or Kumho E&C.

Before it was merged into BTA, Beton 6 met a lot of big difficulties in the corporate governance. Similarly, Coteccons was in the development stage that it needed more power to compete with international construction bidders.

Masan Consumer, belonging to Masan Group has bought a series of companies in the food and foodstuff sector, including Vinacafe and Proconco, Vinh Hao to become the redoubtable rivals to the big names like Unilever, Nestle or CP. With the strong determination for M&A, Masan is believed to pay higher prices to attain domestic potential businesses from the hands of foreign investors.

Vinh Hao, a well-known mineral water brand for the last 80 years, has been sold to Masan Consumer at VND85,000 per share, which now holds 24.9 percent of the stakes of Vinh Hao. The noteworthy thing in the deal was that Masan Consumer paid VND85,000 per share, while the market price was VND25,000.

Economists said M&A proves to be a strong driving force for the next stage of the economic development in Vietnam, which began in 2011. They have commented that it is now the time when domestic private enterprises to join forces to increase the business scale and improve the competitiveness, or they would fall into the hands of foreign sharks.

The economists also believe that in the current economic period, Vietnamese powerful groups now can hold the heavy responsibility of preserving Vietnamese brands and not let the brands disappear or fall into the hands of foreigners.