Dabaco wants to regain stake in joint venture with Kido

Dabaco is looking to revert its M&A deal with Kido

Nguyen Nhu So, chairman of the Board of Directors of Dabaco Group issued the information that the group is re-assessing Dabaco Foods in order to buy out Kido from this joint venture.

In June 2017, northern livestock giant Dabaco Group JSC has decided to sell 50 per cent of its subsidiary Dabaco Food to the Kido for VND100 billion ($4.35 million). It also transferred 5 per cent of Dabaco Food to Nguyen Nhu So, Dabaco’s chairman. Hence, Dabaco kept 45 per cent of the subsidiary’s capital, equal to VND90 billion ($3.9 million).

At the time, Dabaco Food owned three plants for slaughtering, processing, and preserving cattle and poultry, with a capacity of 25,000 chickens a day, packaging canned meat and sausages, and producing and preparing frozen and fresh meat. Its partners included large supermarkets like Vinmart, Vinmart+, AEON, Lottemart, Big C, and Co.opmart.

After the sale, Dabaco Group expected to pool the strengthens of the two parties to promote Dabaco Food. Accordingly, Dabaco Food would be turned into an outsourcing company, with Kido fully controlling products and brands.

An aggressive M&A strategy helped Kido enter the food and seasoning market quickly, gradually becoming the leading foodstuff company in Vietnam and expanding its market to Southeast Asia. In addition, Kido plans to expand its market share in the food and seasoning sector by promoting co-operation with its partners and conducting further M&A with large food producers by capitalising on its internal strength, nationwide distribution system, and profound understanding of the domestic retail market and consumers.

However, Dabaco's expectations for Dabaco Foods failed to materialise more than two years since the M&A deal, prompting it to consider regaining its stake from Kido and taking matters to its own hands.