Abbott’s deal to nurture long-term investment

How much did the deal cost Abbott?

This acquisition is a mutually agreed-upon transaction. We are unable to disclose the details of the transaction. However, we can share that Abbott is investing $15 million in investment capital with 3A Nutrition, in addition to the up-front investment of $5 million.

Why did the deal happen now?

We have been partners for nearly 20 years of excellent partnership with 3A Nutrition. 3A Nutrition has been outstanding in terms of their field execution, their people have been very hardworking, very industrious, very entrepreneurial that allows us to bring a lot of our science-based products to the Vietnamese people.  Over time our business has grown to a significant level, so we feel it’s now the right time for us to bring both companies as one, for us to make sure that we work as one Abbott into the future. We have had a very successful business here, and currently a representative office here in Vietnam.

With this mutual acquisition, it will allow us to bring more of our science-based products to the Vietnamese people. It will allow us to improve our geographic presence which is already represented in all the provinces in Vietnam. With the acquisition, together we will be able to get deeper into the provinces that we have been serving and we will continue to bring our science to the healthcare professionals. The nutritional market in Vietnam is expected to have strong growth driven by an increased awareness of the importance of nutrition and rising personal incomes. We are excited by this opportunity to better serve and support the growth and wellness of our Vietnamese consumers.

It appears to show your strong confidence in Vietnam’s market. Could you explain further?

Our business growth is built on four key strategies and of which emerging markets is one of them. The seven key emerging markets for Abbott’s nutrition business include China, India, Brazil, Russia, Vietnam, Mexico, and Turkey. Abbott is committed to these markets and Vietnam in the Pacific Asia region, is particularly our priority.

The first reason is the people. What we credit is the hardworking and entrepreneurial culture of the people that allow Abbott products to be successful here. The second is the interest of the Vietnamese people in nutrition and how it can be of help. In fact, you probably know that dairy industry is among the fastest growing sectors of the economy in Vietnam. So given that, there is a huge opportunity and appreciation on how nutrition and science can contribute to health.

The third is 3A’s infrastructure. 3A has shown us how and what it takes to be successful in Vietnam over the last close to 20 years. What we are doing in Vietnam is characteristic of how Abbott works in emerging markets where we are constantly investing and innovating in these markets.

M&A deals are normally questioned about their synergies created and their impact on the new entities’ operations and the society as well. What is the case of your deal?

Typically, M&A creates synergies. In our case, this is an acquisition which has been mutually agreed on and we are bringing our distributor in house to be part of Abbott extended family.
This means together we will be able to improve our presence in Vietnam in a deeper way to better serve the local community via bringing to them the latest innovations and science-based nutritional products.

We value 3A Nutrition’s employee and the work we have done together. We recognize that Abbott cannot be successful without 3A. So our objective is not to buy 3A Nutrition and destroy the value. We want to continue to build on that value. This means 3A Nutrition will continue as an independent entity with its own general director. 3A Nutrition will report into Abbott, so the ownership of 3A Nutrition has changed but the infrastructure of the company will remain intact.

With Abbott’s acquisition of 3A, will the deal create a controlled market share for the former? And will there be any price change after the deal?

In our case that will not come in at all, because the market share doesn't change. With this mutual acquisition, 3A, Nutrition, our distributor will be brought in house and will become part of the Abbott family. We are not taking over a competitive company. So there is no change in market share. Our whole goal is to intensify our presence with 3A Nutrition and also continue to better serve the market.

On pricing, Abbott’s prices reflect a fair value in the market for our premium, science-based products. Our products are backed by significant investment in nutrient and ingredient research, formulation work and state of the art quality and manufacturing systems. We look at a number of factors when considering how to price appropriate. 

Our pricing varies by country, economic factors, demographics, costs associated with serving (shipments, tariffs), so the acquisition of 3A Nutrition has no direct impact.  Our goal is to ensure access to our nutrition products.