Masan Group’s M&A strategy paying off

In the first nine months of 2023, Masan recorded a positive performance with net revenues of $2.35 billion, an increase of 3.5 per cent on-year.

Its consumer businesses - WinCommerce, Masan Consumer Holdings, Masan MEATLife, and Phuc Long Heritage - grew their combined earnings before interest and taxes by 45.5 per cent in the same period, and over 47 per cent in the third quarter compared to last year.

The achievement is a testament to Masan’s efforts to adopt a robust M&A strategy to drive growth across key consumer-retail segments in Vietnam.

Over more than 27 years of operation, Masan has spent heavily on M&A activities to build an ecosystem to realise its Point of Life vision with the value chain from manufacturing to retail, telecommunications, and financial services. These areas account for 80 per cent of the daily spending of Vietnamese consumers.

At the end of 2020, Masan Group made a big splash in the Vietnamese market with the merger of retail chain VinCommerce (now known as WinCommerce) from

VinGroup and became the owner of VinMart and VinMart+ (now known as WinMart and WinMart+). Although the deal value was not disclosed, analysts believed it was a huge sum.

Betting on the deal, Masan foresaw that the future of the consumer goods industry lay in the hands of modern retailers. Originating as a pure-play consumer goods manufacturer, Masan extended its reach into the retail industry to increase its market access from only 1 per cent to nearly 25 per cent of a consumer’s budget.

Commenting on the deal at the time, Masan Group’s board chairman Nguyen Dang Quang said, “Had we not made our queen’s gambit move, this would have marked the beginning of the end for Masan.”

Nevertheless, Masan faced a slew of challenges, especially a loss of $100 million from VinCommerce while it attempted to build up its operational experience in the retail industry. Masan’s stock price dropped by half within one month after the deal.

After taking over the retail chain, Masan took drastic actions to turn things around, such as shutting down over 700 mini supermarkets to replace them with a new and more advanced model, and streamlining the product portfolio. The group also made efforts to improve the supply chain, such as establishing a logistics company to increase operational efficiency and reduce costs.

Masan owns more than 3,500 WinMart, WinMart+, and WIN stores

At the beginning of 2022, Masan set up Supra to make its official foray into local logistics services. Its initial aim was to serve the group’s ecosystem, saving costs for both consumers and partners. In that time, Supra has supported WinCommerce to slash 13 per cent of logistics costs for goods delivered via Supra’s distribution centre system.

At the same time, Supra ensures goods are fresh, high in quality, and available to meet customers’ shopping needs. It supplies products to a network of over 3,500 WinMart, WinMart+, and WIN supermarkets and stores.

After three years under Masan management, with an efficient restructuring strategy, WinCommerce has maintained its position as Vietnam’s largest retail chain, with earnings before interest, taxes, depreciation, and amortisation increasing from -7.4 per cent in 2019 to 3 per cent in 2022.

With a slew of deals, Masan considers M&As a tool for the group to execute its strategy. CEO Danny Le said, “When buying shares in other companies, whether at a strategic or controlling stake, Masan eyes the platforms of these companies to serve the group’s overall strategy rather than revenue or profits.”

“These platforms can be a strong method to help create the best products at reasonable prices for consumers. They can also be a distribution network that will help Masan expand its distribution system or build and maintain strong Vietnamese brands,” Le added.

In its history, Masan has also made other share purchases of Vinacafe Bien Hoa, Vinh Hao Mineral Water, VISSAN, Cholimex, NET, Phuc Long, Mobicast, and more. Regardless of whether the goal is to increase market share or venture into new areas, all of these deals share the same objective: to complete the Point of Life ecosystem.

In 2022, Masan spent $280 million to scoop up an 85 per cent stake in Phuc Long, officially venturing into the food and beverages industry. The previous year, Masan acquired 70 per cent of Mobicast to enter the telecommunications sector. The mobile virtual network operator owns the Reddi network brand (now named Wintel), integrated with its comprehensive telecommunications services. The expansion into the telecoms field was the first step for Masan to digitalise its Point of Life consumer ecosystem and create a seamless offline-to-online experience for its products and services.

Danny Le said that Masan has many years of experience in the food sector. To serve consumers directly, the group needs to build a strong footprint in the retail industry.

“However, it may take 5-7 years to build things from scratch with a slim chance of success. It is a long journey to access technology or drive digital transformation. Therefore, the group relies on M&A to seek the DNA of technology and connect with Masan’s DNA,” Le said. “The best tool is M&As and large-scale investments to compete with foreign chains.”

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