Mergers, acquisitions expected to boom this year
Big foreign investors have a keen eye on M&As in consumer goods in Vietnam, with their investments in dairy giant Vinamilk (VNM), food processor Masan Group (MSN), confectionery Kinh Do Corp (KDC) or Golden Gate (who owns famous restaurant chains like Ashima, Kichi Kichi, Sumo BBQ) all huge financial successes.
According to many experts, the strong growth of M&A deals in Vietnam is a normal phenomenon. Many Vietnamese firms have revealed their weaknesses during the economic crisis. They have potential but lack management experience and development strategy. Such companies are the best M&A targets for foreign investors, who seek good deals at cheap prices, the experts said.
Hoang Tung, founder and manager of Pizza Home Company, predicted more M&A deals would be carried out in the field of consumer goods this year.
"It always takes time to develop a distribution system in the consumer goods sector and M&As were an effective way to own one," Tung said, noting that famous brands like Burger King, Subway, Domino’s, Starbucks and McDonald’s have plans to enter the Vietnamese market.
Meanwhile, with large inventories accompanied by poor liquidity and the Government planning to extend loans to home buyers only but not to real estate companies this year, weak domestic property companies would likely have to sell properties to external partners to survive.
HCM City Real Estate Association’s chairman Le Hoang Chau said Vietnam’s real estate market has been on the investment list of many foreign corporations since last year and they could disburse their capital this year.
However, Andy Ho, managing director and head of investment at VinaCapital, has a different view. He said M&A investors should not buy each project but instead buy all the company’s assets via the stock market, reports the Phap luat thanh pho Ho Chi Minh newspaper.
"With the current dismal developments on the stock market, shares of real estate companies were being traded under their actual value (including their projects)," Ho said.
In November, VinaCapital offered for sale a 50 percent stake in the Hanoi-based five-star hotel Metropole. This promised to be a notable deal in the property market this year.
The last days of 2012 saw a big deal in the banking sector with the Japanese Bank of Tokyo Mitsubishi UFJ paying $743 million to buy a 20 percent stake in Vietinbank (CTG).
Financial sector also draws foreign interest but M&As in this sector are forecast to be more difficult as they have to follow the restructuring road map and be approved by the Government.
