Top ten outstanding M&A deals during 2018-2019 announced by Vietnam M&A Forum 2019

Foreign investors were involved in almost all of the largest M&A deals in Vietnam. However, It is easy to see that domestic enterprises have also been on the offensive by acquiring foreign companies in increasing numbers.

Here is the list of Vietnam’s 10 largest M&A deals in the 2018-2019 periods selected by Vietnam M&A Forum 2019 announced at the press conference organised by VIR and AVM Vietnam on July 23.

SK Group, Vingroup, and Masan

Notably, SK Group, through its investment arm SK Southeast Asia Investment, has decided to invest $1 billion to acquire the shares of Vietnam’s leading privately-run conglomerate Vingroup, according to Bloomberg.

Previously, Vingroup has announced a plan of issuing shares through a private placement, aiming to raise at least VND25 trillion ($1.1 billion). The group expected to offload 250 million shares, or 7.8 per cent of the shares in circulation, to a maximum of five foreign investors at a minimum price of VND100,000 ($4.3) per share.

Of the total funds raised from the process, around VND10 trillion ($434.78 million) would be used for debt restructuring, VND6 trillion ($260.87 million) to invest in Vingroup’s subsidiaries including VinFast, VinTech, and Vinsmart, and VND9 trillion ($391.3 million) would be allocated as short-term loans for the operations of the group and its subsidiaries.

Regarding Masan Group Corporation (HSX: MSN), in October 2018, Masan announced the completion of SK Group’s purchase of 109,899,932 treasury shares at the unit price of VND100,000 ($4.4), a total consideration of approximately $470 million. SK Group is now the largest foreign shareholder of Masan Group.

Previously, in September, Masan Group signed a strategic partnership agreement with SK Group. The agreement would enable the two parties to draw on each other’s strengths to accelerate Masan’s and SK’s respective growth strategies. The corporate groups aim to jointly pursue transformational business opportunities in Vietnam and to synergise existing business units.

Saigon Co.op and Auchan

In July 2019, Saigon Co.op and French retailer Auchan announced completing the hand-over process of the entire business operations of Auchan in Vietnam. Accordingly, Saigon Co.op took over 18 stores, 15 of which the French retailer has previously closed and three that have been operating at a profit, along with the e-commerce platform and online application of Auchan Vietnam.

Although the value of the acquisition was not revealed, Saigon Co.op's representative said that the two sides have ended the negotiations on price. Saigon Co.op will operate these stores until the 2020 Lunar New Year after which the sides will sit down to negotiate further co-operation opportunities, including exporting local products via Auchan's global retail chain.

Truong Hai and HAGL

In April 2019, Truong Hai Auto Corporation (Thaco) expressed interest in buying approximately 70 million shares to increase its holding in Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico) as per the agreement between the two parties, after spending nearly $100 million on buying convertible bonds from this agricultural company.

Accordingly, Thaco registered buying 69.7 million shares in HAGL Agrico to increase its holding from zero to 7.86 per cent. The transaction was expected to be completed between April 23 and May 22, 2019. However, in reality, Thaco bought 4 million registered shares in June. Besides, HAGL registered to sell nearly 60 million shares in HAGL Agrico. The deal was expected to be completed between July 12 and August 10 and Thaco was considered one of the most promising investors.

Vingroup and Fivimart, Hanwa

In September 2018, Vingroup’s retail arm, VinCommerce, completed the acquisition of 100 per cent of the Fivimart supermarket system. These stores were renamed to VinMart, the supermarket brand of Vingroup.

The deal between VinCommerce and Fivimart came after retail giant AEON terminated its deal with Fivimart after four years due to losses, selling its 30 per cent stake in Fivimart.

Besides, in August 2018, Hanwha Asset Management paid $400 million for 84 million preferential shares in Vingroup. The sale came after Hanwha’s unsuccessful attempt to join the $13.5 billion public debut of Vinhomes, the property arm of Vingroup, back in May 2018.

Mitsui and Minh Phu

In June 2019, MPM Investments Pte., Ltd., a subsidiary of Japan’s Mitsui & Co., Ltd., acquired 60 million shares in Minh Phu Seafood JSC (MPC) to raise its stake in the Vietnamese shrimp processor to 35.1 per cent.

The purchase was made through a private placement worth nearly VND3.04 trillion ($130.5 million), equivalent to VND50,630 per share. In late-May, MPM bought 10.2 million shares, or a 7.37 per cent stake, in the shrimp processing company.

Taisho and Hau Giang Pharmaceutical

In April 2019, Taisho Group, one of the five largest pharmaceutical firms in Japan, officially acquired a controlling stake in Hau Giang Pharmaceutical JSC (DHG) after spending VND2.47 trillion ($107.4 million) on buying 20.6 million DHG shares.

Through the purchase Taisho increased its ownership in DHG to 66.4 million shares, equalling 50.78 per cent of the stakes. With the offered selling price of VND120,000 apiece, the Japanese pharmaceutical firm spent VND2.47 trillion ($107.4 million) on the deal. The other major shareholder in DHG is State Capital Investment Corporation (SCIC) with 43.3 per cent.

The reason behinds the increase of ownership in a local pharmaceutical firm is because Taisho’s market share in the food supplement and hair growth supplement segments is decreasing in Japan, while Vietnam has great potential to develop these products.

Vinamilk and GTNfoods

In June 2019, Vinamilk completed the purchase of 90.06 million of the 116.71 million shares it registered to buy in GTNfoods JSC. After the deal, Vinamilk increased its holding in GTNfoods to 38.34 per cent. While Vinamilk refused to disclose the value of the deal, based on the VND13,000 share price offered by Vinamilk, the dairy manufacturer may have paid VND1.17 trillion ($50.87 million) on the purchase.

Previously, even though GTNfoods JSC refused its previous proposal, Vinamilk remained still eager to acquire more stakes in the firm (which holds 51 per cent of Moc Chau Milk Company) as part of its M&A strategy to expand its market share in the dairy manufacturing sector.

Sojitz and The Pan Group

In September 2018, The PAN Group (HXS: PAN) completed the private placement of 13.4 million shares to Japan’s Sojitz Group for VND61,000 ($2.7) per share. Sojitz invested VND817.4 billion ($35.54 million), becoming a major shareholder with 10 per cent in PAN.

This private placement provides PAN with more financial resources to invest and implement its next M&A projects in its development strategy in agriculture and food industries. More importantly, Sojitz has been chosen as a strategic partner of PAN to co-operate on upgrading Vietnam’s agricultural and food products for distribution to domestic and international markets.

"This is an important milestone in The PAN Group’s development path. Our selection criteria focused on finding a business partner rather than choosing a purely financial investment organisation. Together with the capital contribution, we established a Collaboration Committee which includes key leaders from the two groups and is chaired by the chairman of The PAN Group. The committee will bring together top industrial experts from Vietnam and Japan in order to formulate and promote the implementation of agricultural and food projects of the two parties in Vietnam and other countries in the region. I believe that the co-operation will contribute to leveraging Vietnamese agricultural and food products in international markets,” said Nguyen Thi Tra My, chief executive officer of The PAN Group.

SonKim Land mobilised capital from its strategic partners

SonKim Land Corporation has successfully concluded a deal that raised approximately $121 million from international investors, including Lemongrass Master Fund, ACA Vietnam Real Estate LP, and Credit Suisse in June 2019.

This deal follows the success of two previous deals in 2013 and 2016. Besides, this deal was Son Kim Land's biggest fundraising ever since 2013. The fact that existing investors continued to participate in the fundraising and attracting a global bank like Credit Suisse proves that the company has produced quality projects and that it has great potential to grow bigger.

Gelex and Viglacera

In March 2019, the Ministry of Construction (MoC), the biggest shareholder at Vietnam’s largest ceramics and tile producer Viglacera Corporation (Viglacera), sold 69 million Viglacera shares for nearly VND1.6 trillion ($69.57 million). The buyers were reportedly shareholders related to Vietnam Electrical Engineering Equipment Joint Stock Corporation (Gelex).

Gelex now holds 112 million Viglacera shares, equal to a 25 per cent stake. Before the sale, Gelex held 44 million shares.