Foreign investors turn to M&A to increase SOE holdings

The M&A scene is heating up around state-owned firms

SCG wants to acquire more stake in Binh Minh Plastics

Thailand’s SCG, through its subsidiary Nawaplastic Industry Co., Ltd., expressed interested in buying 818,609 shares in Binh Minh Plastic JSC (BMP) to increase its holdings to 50.89 per cent, equalling 41.66 million shares. The transaction is expected to occur between April 4 and May 3.

Earlier on March 19, State Capital Investment Corporation (SCIC) completed the handover of 24.14 million BMP shares to Nawaplastic, after the Thai firm won at the auction organised on March 10.

As a result, Nawaplastic spent approximately VND2.329 trillion ($102.33 million) to buy 24.139 of the 24.159 million shares on offer at the initial price of VND96,500 ($4.24). The deal increased Nawaplastic’s holdings in BMP to 49.9 from 20.4 per cent.

SCG expressed its ambition to increase presence in the domestic plastic market by buying into BMP and Tien Phong Plastic JSC, which are two of the largest plastics manufacturers in the country. Accordingly, while Tien Phong Plastic ’s products are covering the northern market, BMP’s products are popular in the south.

In 2012-2013, Nawaplastic spent VND487 billion ($21.3 million) buying 10.33 million NTP shares to become the second-largest shareholder with 20.82 per cent, following State Capital Investment Corporation (SCIC) with 37.1 per cent. After receiving dividend via stocks, the Thai firm currently holds 21.27 million shares in NTP.

Besides, in 2012, Nawaplastic also purchased 7.13 million ordinary BMP shares, representing 20.4 per cent of the charter capital, for VND352 billion ($15.4 million). Additionally, after being paid dividend via stocks, the Thai firm currently holds 16.7 million BMP shares, equaling 20.4 per cent of the stakes.

After SCIC issued the plan to divest from BMP, Nawaplastic decided to drop Tien Phong Plastic to increasing its holding in BMP.

BMP manufactures and trades civil and industrial products made of plastic and rubber.

Despite being one of the largest plastic manufacturers in Vietnam, BMP recently lost market share to foreign and domestic competition. According to its audited 2017 financial statement, BMP’s after-tax profit was VND464.7 billion, down VND6.6 billion on-year.

Leading Japanese group Itochu becomes second largest shareholder of Vinatex

According to newswire Nikkei Asia, Itochu Group spent $46.9 million buying an additional 10 per cent stake in Vietnam National Textile and Garment Group (Vinatex). The deal increased Itochu’s holding in Vinatex to 15 per cent to become the second largest shareholder of the group, following the Ministry of Industry and Trade (with 53 per cent).

Previously, in January 2017, Vinatex signed a strategic co-operation agreement with Itochu.

According to the agreement, Itochu would assume the role of the consulting partner for Vinatex and its member companies in developing their textile and garment supply chains from fibre to thread, fabric and sewing, and retail distribution to co-operation and introducing domestic and foreign partners.

Itochu, one of the leading economic groups in Japan operates in various areas, including textiles and garment, and cooperates with some 100 textile and garment companies of Vietnam.

It signed a framework agreement to support several projects in dyeing and materials production in Vietnam, training in the country's dyeing sector, and utilising the capacity of Vinatex's dyeing factories in the central region in 2015.

Regarding Vinatex, one of the largest textile and garment groups in the country, reported an export turnover of $3.08 billion in 2017, up 2.7 per cent compared to the initial plan.

According to the company’s consolidated financial statement, Vinatex’s net revenue in 2017 was VND17.5 trillion ($766 million), an increase of 13.2 per cent over the last year, with accumulated profit of VND1.6 trillion ($70 million), reducing 6 per cent.