Investors in agriculture are eager to get involved in merger and acquisition deals to mobilise capital for recovering and expanding their operations in this country.
|The agricultural sector is not yet alongside the leaders in M&A scene in Vietnam, Photo: Le Toan |
Thai livestock and aquaculture group C.P. Vietnam has registered to buy 6.5 million shares, equalling 8.34 per cent stake, in shrimp exporter and processor Sao Ta Foods JSC (trade name: Fimex Vietnam), which is a member of The PAN Group. With the expected price of VND50,000 ($2.17) per share from Sao Ta, C.P. Vietnam will pay VND327 billion ($14.2 million) for the purchase.
The deal is expected to be completed in the next few months. Once completed, the Thai livestock company will increase the ownership ratio in Fimex Vietnam to a 24.9 per cent stake from the 16.56 per cent ratio that C.P. Vietnam acquired from the deal in late October. The deals will help the two parties complete their production chains in the country.
Ho Quoc Luc, chairman of the Board of Directors of Fimex Vietnam, said, “The combination is to promote the two parties’ strength. Fimex has strength in growing and processing shrimp, while C.P. Vietnam is one of the leaders in breeding and feed for shrimp.”
Fimex Vietnam plans to double its farming area by 2025 and take advantage of free trade agreements to expand its business, and targets to be the second-largest shrimp exporter in the country.
Meanwhile, at C.P. Group, it is expected that the revenue from overseas markets will contribute 75 per cent to the group’s revenue. C.P. Vietnam is currently the third-largest arm of the group, thus becoming the strategic shareholder of Fimex Vietnam will help the group move onwards and upwards. C.P. Vietnam currently operates 16 factories in Vietnam with a total annual capacity of 4.2 million tonnes, three of which produce aquaculture feed. The group currently holds 20 per cent of the market in terms of feed in Vietnam.
The Board of Directors at The PAN Group is seeking shareholders’ approval to sell 235.8 million shares to double its chartered capital to $169.5 million. Merger and acquisition (M&A) is its core strategy, thus the group will spend capital mobilised from the sales implementing such deals in terms of agricultural and food sectors.
Nguyen Duy Hung, chairman of The PAN Group, said, “The group will surely increase its ownership in Vietnam Sterilisation JSC to 51 per cent. With it and Vinaseed in the same family, there will be many advantages in distribution channels, leading to better operations and also efficiency.”
Although agriculture is not among the leading sectors for M&A in the country as yet, it has nonetheless witnessed the entrance of big groups such as Truong Hai Auto Corporation, Vingroup, The PAN Group, GTNfoods, and Unifarm in recent times, demonstrating that the income from agriculture is not on a small scale. Le Xuan Dong, managing director and head of Market Research and Consulting at FiinGroup JSC, stated that M&A in agriculture is becoming an indispensable trend to restructure the industry, with focus on a number of large-scale groups. “Both foreign and domestic enterprises will be eager to look for suitable partners to help them penetrate the market. They see potential in capital and gaining knowledge of the market,” Dong said.
Sharing experience to conduct M&A deals effectively, Hung from The Pan Group said that the important factors to find good partners are not only financial ones. “During the process to look for partners, we prefer to choose enterprises with a board of directors that have similar investment ambition to develop large-scale projects. When the two parties’ leadership gets a consensus on operating direction and in culture, it is favourable to integrate the shareholders with each other,” he said.