Vinamilk offered $65.21 million for GTNFoods shares

Vinamilk offered to spend $65.21 million buying GTNFoods shares

Accordingly, Vinamilk made an offer to buy a maximum of 46.68 per cent of GTN’s shares, equivalent to 116.71 million shares at the price of VND13,000 ($0.56) per share. This offer is evaluated at VND1.5 trillion ($65.21 million).

However, Vinamilk’s offer is lower than the market price of GTNFoods. Closing the session on March 12, GTNFoods was at VND16,400 ($0.71) per share, an increase by 60 per cent vis-á-vis the beginning of the year.

Previously, in 2017, GTNFoods has acquired 65 per cent of the stake in Viet Nam Livestock JSC (Vilico), the parent company of Moc Chau Milk Company, for VND1.33 trillion ($57.82 million).

Moc Chau Milk currently owns the largest dairy cow farm in the north with 1,000 hectares of agricultural land and more than 4,000 hectares of livestock households in Moc Chau district, Son La province. Its dairy cows number up to 23,500 (3,000 of which are raised on large-scale farms) with an output of up to 100,000 tonnes of fresh milk per year. Therefore, the two Vietnamese milk will become one if this transaction success.

Before the deal, Vilico was a state-owned enterprise managed by the Ministry of Agriculture and Rural Development. In June 2016, the ministry completed offloading its entire 77.59 per cent stake in Vilico to a strategic investor.

In 2016, GTNFoods acquired 95 per cent capital in Viet Nam Tea Corporation (Vinatea) for around VND500 billion ($21.74 million).

In 2018, GTNFoods boosted its dairy business and increased investment to build distribution systems, increased discounts, marketing, advertising, and promotion costs to develop, expand markets, increasing competitiveness for the next step.

Since then, the business recorded large expenses, reducing its profit to only VND104 billion ($4.52), down 31.5 per cent against 2017.

Meanwhile, Vinamilk is the largest dairy company in Vietnam with the liquid milk market share of about 55 per cent in 2018. In addition, Vinamilk holds more than 80 per cent of the yogurt and condensed milk, as well as more than 30 per cent of powdered milk market, according to Thanhnien.vn.

In 2018, Vinamilk's revenue reached more than VND52.56 trillion ($2.29 billion), with over VND10.227 trillion ($444.65 million) of after-tax profit.