Vinamik offers to purchase GTN shares for Moc Chau Milk
Viet Nam Dairy Products Joint Stock Company (Vinamilk) has offered to purchase more than 116 million shares of GTNFoods Joint Stock Company (GTN) as GTN indirectly holds shares in Moc Chau Milk.
According to the document sent to the State Securities Commission on the purchase, Vinamilk has offered to buy a maximum of 46.68 per cent of GTN shares, or 116.71 million shares, with a price of VND13,000 per share.
Vinamilk estimates to spend about VND1.5 trillion (US$64.5 million) on the deal.
However, the price offered by Vinamilk is lower than GTN’s market price on the local stock exchange.
The closing price of a GTN share yesterday was VND18,250, up 82.5 per cent compared to the beginning of this year.
The higher price was believed to be due to information about Vinamilk’s purchase of GTN shares, reported vneconomy.vn.
Vinamilk has eyed the GTN shares because GTN indirectly owns shares at Moc Chau Milk, which has the largest dairy cow farm in the north.
Moc Chau Milk production is currently up to 100,000 tonnes of fresh milk per year. As per the development strategy, the company will increase the number of cows to 35,000 in 2020 and 70,000-100,000 in 2030. With milk production from Moc Chau Milk, Vinamilk can reduce the supply of imported milk.
GTNfoods was established in 2011 with charter capital of VND25 billion and registered capital of VND80 billion, specialising in the export of rattan and bamboo products to 50 countries.
Now, GTNfoods owns 75 per cent of the shares of Vietnam Livestock Corporation (Vilico) while Vilico holds 51 per cent of Moc Chau Dairy Cow Joint Stock Company.
In addition, GTNfoods holds 95 per cent of Vietnam Tea Corporation’s shares and 35 per cent of total shares at LadoFoods – owner of the Dalat wine brand.
In 2018, GTNfoods achieved revenue of more than VND3 trillion and after-tax profit reached VND104 billion, significantly lower than VND152 billion in 2017 due to the company’s loss in the last quarter of 2018.
Vinamilk’s board of directors also said that in the first two months of this year, the company gained a two-digit growth rate in its total revenue compared to the same period last year.
According to a report at the 2018 annual meeting, Vinamilk now holds 58 per cent of the milk market share in Viet Nam.
Mai Kieu Lien, Vinamilk general director, said the company aims to increase its market share by 1 per cent each year to more than 60 per cent in 2021, reported nhipcaudautu.vn.
If this deal succeeds, Vinamilk will quickly increase its market shares on the local milk market.
Vinamilk expected that, in the period 2019-21, its revenue growth, excluding merger and acquisition (M&A) activities, to reach 5 per cent per year.
By 2021, M&A activities are expected to contribute VND6 trillion to its total revenue while the total revenue in 2021 is estimated at VND70 trillion, much higher than VND53 trillion in 2018.