In early August, rumours took flight that Mobile World Investment Corporation (MWG) will acquire Tran Anh Digital World JSC (Tran Anh), and have now came true as both parties confirmed the acquisition plan, which is still waiting for the approval of shareholders.
|The rumoured acquisition is awaiting approval of Tran Anh's shareholders (Illustration)
MWG acquires to dominate
Talking with VIR, Tran Xuan Kien, chairman of Tran Anh, said that leaders of both enterprises have reached a mutual agreement on the acquisition plan. However, according to Kien, nothing is definite just yet, as MWG and Tran Anh are awaiting approval of their shareholders.
“If this plan is approved by both parties, we will implement the necessary procedures soon to prepare for the mergers and acquisitions (M&A) process,” Kien said and added that Tran Anh and MWG are listed on the stock exchanges with all transparent figures and information published, so if approved, the M&A deal will be implemented quickly.
Earlier, at the shareholders’ meeting on August 28, MWG’s shareholders agreed with an 85.93 per cent approval rate to spend VND2.5 trillion ($110 million) on acquiring some retail chains, including one in the field of electronics and one in the pharmaceutical industry. This budget is five times as much as the initial one approved by its annual shareholders’ meeting in early 2017. The sources of funding will originate from borrowings, bond issuances, undistributed profit, and new stock issuances.
Regarding Tran Anh, a document has been submitted to its shareholders asking for approval on the sale of more than 25 per cent of the chartered capital to MWG. August 31 is the deadline for Tran Anh’s shareholders to vote for this plan and the final results will be published in short order.
Kien said that there has not been a final decision by Tran Anh’s shareholders, so MWG cannot estimate the specific chartered capital it may acquire. However, Kien revealed that he had private talks with some of Tran Anh’s shareholders and he is confident that the acquired amount would be large enough for MWG to dominate and decide on Tran Anh’s activities.
Tran Anh’s stock price
Kien did not mention the price as he said that both parties are negotiating. However, he revealed that MWG is planning for a private placement of 6-7 million shares for its M&A activities and this number of stocks may be exchanged for Tran Anh’s shares held by no more than ten large shareholders.
The trading price of Tran Anh’s ticker TAG on HNX was VND32,600 ($1.4) per share on August 28, 2017, when MWG held its shareholders’ meeting for approval of its M&A plan. According to Ho Chi Minh City Securities Corporation (HSC), to control Tran Anh, MWG may have to purchase TAG stocks held by Tran Anh’s shareholders at the price of VND50,000 ($2.2) per share, which is 50 per cent higher than the market value.
Afterwards, these shareholders will have to spend the money purchasing 6-7 million MWG shares issued in the private placement. Basically, this is a stock swap for a group of less than ten Tran Anh shareholders.
According to Kien, if Tran Anh’s shareholders approve the plan of acquisition, MWG wishes to purchase all TAG stocks from small and big shareholders alike. Regarding small shareholders, the purchasing price offered will not be less than big shareholders.