Intrigue in M&A carry on with new top-dollar deals

Intrigue in M&A carry on with new top-dollar deals, illustration photo

Hong Kong conglomerate Swire Pacific last week announced that it had reached an agreement to take over Coca-Cola’s bottling operations in Vietnam and Cambodia. Swire will spend just over $1 billion on the assets, with the deal being handled through Swire Pacific’s subsidiary, Swire Coca-Cola Ltd.

The deal is Swire Coca-Cola’s first investment in Southeast Asia, securing its position in one of the world’s fastest-growing beverage industries. After closing the deal, Swire Coca-Cola will own and manage three bottling facilities under Coca-Cola Beverages Vietnam and one under Cambodia Beverage Company.

Patrick Healy, chairman of Swire Coca-Cola, said, “This acquisition marks a major milestone for Swire Coca-Cola, significantly expanding our operating footprint to a new region. This expansion is part of a broader strategy to increase the scale, volumes, and revenues of our bottling business.”

At the end of June, Samsung Engineering also scooped up a 24 per cent share of DNP Water, a Vietnamese water supply company, for $41 million. Accordingly, Samsung Engineering became DNP Water’s second-largest shareholder with DNP Holding, owning 53 per cent.

The deal paves the way for Samsung Engineering to penetrate Vietnam’s water treatment industry, which in turn acts as a gateway to the larger Southeast Asian market.

GyuYeon Kang, executive vice president of Samsung Engineering, noted, “Our environmental business is positioned as one of our company’s future growth engines and we plan to grow by successfully executing in Vietnam.”

In May, Shinhan Financial Group agreed to purchase a 10 per cent stake in Tiki for an undisclosed sum to become the e-commerce platform’s third-largest shareholder. Shinhan will acquire a 7 per cent stake in Tiki while Shinhan Card will hold the remaining 3 per cent.

The transaction will help Shinhan to widen its customer base, improve credit rating techniques based on non-financial information, and adapt to the digital world by joining forces with Tiki. The South Korean bank anticipates creating a new converged digital ecosystem in Vietnam based on Tiki’s database and Shinhan’s financial skills.

Tiong Hooi Ong, partner at PwC Vietnam, said, “Despite macroeconomic headwinds, 2022 will be another robust year for mergers and acquisitions in Vietnam. We’re seeing an acceleration of strategic decisions to enhance portfolio optimisation. As dealmakers divest to free up capital, they can focus on acquiring capabilities and transforming core business areas.”

According to data by the Foreign Investment Agency under the Ministry of Planning and Investment, as of June 20, the total of newly-registered, adjusted, and contributed capital from foreign investors reached over $14 billion, equivalent to 91.1 per cent over the same period in 2021.

The data noted that there were 1,707 capital contributions and share purchases by foreign investors in the given period, with the total value of contributed capital reaching around $2.3 billion, an on-year increase of 41.4 per cent.

Ong from PwC added that Vietnam’s economic recovery remains strong with GDP growth for 2022 forecasted at 6.5 per cent, much higher than the growth forecast for Asia-Pacific at 4.4 per cent. In addition, with the supportive regulations and policies for investors, the second half of 2022 is providing an opportunity to reassess strategies and act boldly.

“Dealmakers are adapting to a new business climate in which short-term volatility in financial markets, inflationary pressures, rapidly rising interest rates, supply chain disruptions, and geopolitical tensions all appear to be developing into longer-term trends,” Ong said. “This is the time for true leaders and best-in-class dealmakers to make bold moves and set the stage for the next five years.”