Vingroup and its VND-trillion M&A transactions

Vingroup has had a tremendously busy 2018, with a multitude of M&A deals

Vingroup (HSX: VIC) has just published its consolidated audited financial report for 2018. Accordingly, the total consolidated net revenue in 2018 reached VND121.89 trillion ($5.3 billion) and pre-tax profit was VND13.85 trillion ($602.17 million), up 36 and 52 per cent compared to 2017.

In the retail sector, at the end of 2018, VinCommerce, a subsidiary of Vingroup, spent over VND1 trillion ($13.48 million) on the acquisition of the entire Fivimart chain from First Vietnam JSC (FIVI JSC), a retailer with a decade-long experience in Vietnam who held several good locations in crowded trade hubs.

After the acquisition, the 23 Fivimart stores were renamed to Vinmart, pushing Vinmart to the first place among supermarket chains in Vietnam in terms of the number of points of sales.

Along this acquisition, Vingroup completed the purchase of mobile retail chain Vien Thong A, which it will utilise to distribute its Vsmart smartphone products. So far, Vien Thong A has been merged with Vinpro, but has retained its name.

In the pharmaceutical sector, Vingroup also spent VND443 billion ($19.26 million) to buy 96.4 per cent of VinFa and invested into VinFa Drug Research and Production Centre in Gia Binh district, Bac Ninh province.

In November 2018, Vingroup launched the chain of 11 VinFa pharmaceutical stores in Hanoi, located next to Vinmart supermarkets or convenience stores in urban areas and apartment buildings.

Another notable transaction took place in the automobile sector, where Vingroup acquired 100 per cent of General Motors Vietnam with the total deal value of VND900 billion ($39.13 million).

Vinfast will assume ownership of the GM Hanoi factory and will implement an investment programme to build an all-new, global small car licensed from GM and manufactured and sold under the Vinfast brand. The production of this vehicle is expected to begin in the first half of 2019, greatly increasing the capacity and output of the Hanoi plant and growing the manufacturing base of the dynamic Vinfast brand.

In the tech sector, in July 2018, VinSmart, a member of Vingroup JSC, and leading Spanish technology firm BQ signed a strategic partnership agreement to promote the production of Vsmart smartphones in accordance with international standards.

Vingroup's financial report stated that in February 2019, VinTech purchased 51 per cent of Mundo Reader, the management company of BQ with a total transfer value of about $40 million.

Not long after launching in Vietnam, Vingroup has begun to distribute Vsmart phones in the Spanish market.