Japan enterprises interested in M&A deals with Vietnam

There are over 10 deals in progress with value ranging from US$10 million to billions of dollars between enterprises of the two countries, said Amano Takahiro, associate director of corporate finance of Deloitte & Touche Corporate Finance Pte. Ltd.

“Japan businesses are looking for more opportunities in such areas as foods, natural products and consumers goods. These include large Japanese multinational companies. Investment banks are also interested in entering Vietnam via M&A,” Takahiro told the Daily.

Many deals are going on in such areas as oil and gas, consumer goods, distribution network, retail, mining, finance, and agriculture, according to Ewan Matthew Patrick, director of financial advisory services at Deloitte Vietnam.

Thomas McClelland, tax partner of Deloitte Vietnam Co. Ltd., told the Daily that Japanese investors are recently more active in Vietnam because the yen has been quite strong.

“I think they are looking to the future by looking at Vietnamese good brands to use the Vietnamese distribution network and show their products. I think one thing that is attractive here is that we have a proper M&A legal framework,” he added.

Another high-profile company also points out the growth in M&A business in general, not just related to Japan only.

Stephen Gaskill, partner of advisory services of PricewaterhouseCoopers Southeast Asia Peninsula Region, said the company has experienced an upswing in activity since March 2009. He however admitted that his company experienced a significant downturn in deals activity from November 2008 through to February 2009 with many deals being cancelled or put on hold due to the global recession.

“We now appear to be back to levels similar to those of early 2008. It should be noted that the M&A activity statistics indicate that the number of deals, especially between domestic companies, has remained high although the total value has fallen compared to the first half of 2008.”

”We believe this downturn in M&A activity was almost entirely related to the current crisis globally which made foreign investors in particular more cautious and risk averse, while access to funds has become more restricted around the world,” he explained.

Gaskill also noted that individual deal values have been lower due to pricing expectations falling significantly in Vietnam. “This reflects both the difficulties facing vendors when trying to find willing buyers and their difficulties in relation to accessing funds; it also reflects the lower stock market PE ratios experienced over the past year or so.”

Patrick from Deloitte said, “The value and volume of deals have decreased significantly in the first five months of the year, but the interest is increasing.”

“Our belief is that the interest levels are still very strong among both funds and commercial companies. Acquiring an existing asset or company in Vietnam remains a potentially efficient and a relatively quick method of establishing a presence here,” he said.