MobiFone and AVG to cancel acquisition deal

MobiFone and AVG agreed to cancel the deal without any compensation

AVG's shareholders and the leaders of MobiFone have approved cancelling the deal of transferring 95 per cent of the company shares to MobiFone at a meeting on March 12.

Thereby, MobiFone and AVG agreed to cancel the transfer of 344.66 million shares, returning to each other what they received according to the contract, which is seen as the unique aquisition case in Vietnam. The total value of the deal is VND8.889 trillion ($392 million).

According to the Ministry of Information and Communications (MIC), AVG’s shareholders who sold the shares will have to return the money to MobiFone, along with interest and related costs. They will commit to do their utmost to minimise the damages from the cancelled deal. Thereby, MobiFone will receive much more than they paid to AVG's shareholders.

AVG’s representative Pham Nhat Vu agreed not to claim compensation for cancelling the transaction.

There are several reasons to cancel the contract. First, MobiFone did not operate and develop the business in line with the plan and missed many opportunities to exploit AVG’s full potential.

Second, since the contract took effect, MobiFone has only paid 95 per cent of the total value. After the deadline of the next payment, MobiFone has not paid the remaining amount, although AVG continued sending requests.

Moreover, since the authorities started an inspection of this contract, the business and operations of AVG have been facing many difficulties and the company’s reputation has been affected. Both AVG and MobiFone confirmed that the cancellation aims to maintain the reputation of both sides.

At the meeting, the leader of MobiFone explained that the inspection has affected the payment for AVG. He added that there are many difficulties while operating and doing business at AVG, and MobiFone could not focus on developing AVG at the moment.

Regarding the valuation of shares, Pham Nhat Vu said that AVG is a valuable asset. Before it was sold to MobiFone, he intended selling it to partners from Russia and South Korea at an even higher price.

This morning, on March 13, Minister of Information and Communications Truong Minh Tuan informed Government Inspector General Le Minh Khai of the new developments between AVG and MobiFone.

Earlier, on March 8, the Secretariat of the Communist Party Central Committee issued a document on inspecting MobiFone’s acquisition of 95 per cent of the shares in AVG. The Secretariat said this is a really serious and complicated case that required comprehensive inspection and drew public attention.

Party Secretariat asks for inspection results of MobiFone acquisition MobiFone's 95-per-cent stake purchase AVG has been called a “very serious case.”

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