Largest \/ most noteworthy public M&A transactions in the past 12 months
\nOil gas and chemicals
\nIn May 2017, Earth Chemical bought 100% stake in A My Gia Joint Stock Company at about USD79.2 million.
\nFinancial
\nIn July 2017, Vietnam International Joint Stock Commercial Bank bought 100% business of Commonwealth Bank of Australia (Ho Chi Minh Branch).
\nIn December 2017, Shinhan Bank Vietnam Ltd. (\u201cShinhan Bank Vietnam\u201d) acquired ANZ Bank (Vietnam) Limited\u2019s retail business. This successful transaction has been considered as a big step for Shinhan Bank Vietnam\u2019s development in Vietnam market, as well as a rapid growth for Vietnam retail banking in the upcoming time.
\nOther
\nRetail. Noteworthy public M&A deals include the following:
\n\u2022\tIn January 2018, Creador (a private Kula Lumpur-based investment fund) bought 35% shares of Mobile World Investment JSC at USD43 million.
\n\u2022\tThaiBev buying more than 53% shares in Sabeco \u2013 a company owned by the Ministry of Industry and Trade at USD 5 billion.
\n\u2022\tIn November 2017, JD.com bought shares in Tiki JSC at USD 44 million.
\n\u2022\tIn June 2017, Alibaba Group additionally bought shares of Lazada at USD1 billion, thus increasing its shares in Lazada to 83%.
\n\u2022\tIn July 2017, Sea Limited (Singapore) bought 82% shares of Foody Corporatio at USD64 million.
\n\u2022\tIn April 2017, Shinhan Vietnam Bank bought the retail business of ANZ at an undisclosed value.
\n\u2022\tIn May 2017, Bien Hoa Sugar Company and Thanh Thanh Cong Tay Ninh Sugar Company bought 100% charter capital of HAGL Sugar at about USD58.52 million.
\n\u2022\tSynnex Technology International bought 30% shares of FPT Retail and 47% shares of FPT Trading from FPT Corporation at around USD 41 million.
\nFood. Noteworthy deals include the following:
\n\u2022\tIn mid- November 2017, Jardine Cycle & Carriage Limited (JC&C), via Platinum Victory Pte. Ltd bought 5.53% shares of Vinamilk at USD616.6 million.
\n\u2022\tIn late March 2017, CJ Cheiljedang Corporation bought 20% stake in Saigon Trading Corporation at USD8.2 million, bringing its total ownership in Cau Tre Export Products Processing Joint Stock Company to 71.6%.
\n\u2022\tIn May 2017, Kido Corporation bought 27% stake in Vietnam Vegetable Oil Industry Corporation, bringing its total ownership in the company to 51%.
\nReal estate. Noteworthy deals include the following:
\n\u2022\tWarburg Pincus in joint venture with VinaCapital bought 50% shares in Sofitel Legend Metropole Hanoi at about USD100 million.
\n\u2022\tWarburg also established a joint venture with Becamex Industrial Development Corporation to invest in industrial real estate and logistics services with a capital of USD200 million.
\n\u2022\tIn May 2017, Elite Capital Resources Limited bought 100% shares of VinaLand Fund (VinaCapital) in Thang Long Limited Company (project owner of Times Square Hanoi) at USD41 million.
\n\u2022\tIn the first quarter of 2017, Sulyna Hospitality bought 70% stake in a 4-start resort in Phu Quoc from Berjaya Land at USD14.65 million.
\n\u2022\tIn the first quarter of 2017, An Gia Investment Corporation and its partner Creed Group bought 5 apartment blocks of La Casa Project of Van Phat Hung Corporation at about USD40 million.
\n\u2022\tIn March 2017, Keppel Corporation increased its shares in Saigon Centre project ato 16% at USD37 million.
\n\u2022\tIn January 2017, CapitaLand announced the purchase of 90% stake in CapitaLand Thanh Nien.
\n\u2022\tShinhan cooperated with Vinacapital to invest USD100 million in Novaland
\nInsurance. Noteworthy deals include the following:
\n\u2022\tIn April 2017, Aviva Insurance Corporation bought 50% stake of VietinBank Aviva Joint Venture Company from Vietnam Joint Stock Commercial Bank for Industry and Trade.
\nThe major trends in the structuring of public M&A transactions
\nIn Vietnam, M&A transactions usually take the form of either share or asset acquisitions, with share acquisition transactions outnumbering asset acquisition transactions.
\nShare acquisitions by foreign purchasers are commonly structured as offshore direct investments. The new investor can:
\n\u2022\tAcquire shares or capital contributions from an existing shareholder in the target (for example, a joint stock company, limited liability company, and so on).
\n\u2022\tSubscribe for newly issued shares of the target (for a joint stock company).
\n\u2022\tMake further capital contributions to the target (for a limited liability company).
\nIn the case of an asset deal, a foreign purchaser must generally establish a new subsidiary in Vietnam.
\nIn addition, M&A transactions can also take the form of a merger. One or more companies of the same type can be merged into another company by transferring all assets, rights, obligations and interests to the merged company, terminating the existence of the merging company.
\nThe 2014 Enterprise Law sets out the types of business structuring that can be used by investors as a result of M&A transactions. In addition, the 2014 Investment Law is the first law that regulates M&A transactions and clearly provides that such transactions do not require an investment registration certificate. Now, the foreign investors must seek approval from the local Department of Planning and Investment of the transaction if the:
\n\u2022\tTarget company operates in conditional business sectors applicable for foreign investors.
\n\u2022\tInvestment leading to foreign ownership of the target company is 51% or more (in particular, from below 51% to more than 51% and from 51% to above 51%).
\nIn other cases, the target company only needs to register a change of membership\/shareholding at the Business Registration Division. This change has ended years of uncertainty and frustration faced by foreign investors seeking entry into the Vietnam market or expansion through M&A transactions.
\nThe level\/extent of private equity-backed bids in the past 12 months
\nInvestment in the form of M&A transactions is still the most popular form compared with private equity investment. In recent months, private equity funds have been following the securities market in Vietnam, especially companies carrying out value chain operations. Consumer goods and infrastructure are the sectors that attract the most attention. However, due to limited publicly available information, it is not possible to fully assess the level of private equity-backed bids.
\nThe approach of the competition regulator(s) in the past 12 months
\nThe Vietnam Competition Authority under the Ministry of Industry and Trade (VCA) must be notified of the transaction if participating companies have a combined market share in the relevant market of 30% up to 50%. The VCA will then examine whether the calculation of the combined market share is correct and whether the transaction is prohibited (that is, whether the combined market share exceeds 50%, except in certain cases). The transaction can be conducted when the VCA issues a written confirmation that the transaction is not prohibited under competition law.
\nIn recent Grab buying Uber case in South East Asia, the VCA has started its investigation of possible violation of Vietnam\u2019s Competition Law. The case is still at the examination stage.
\nFor more information on the VCA, see www.vca.gov.vn\/Default.aspx?lg=2.
\nMain factors affecting the public M&A market over the next 12 months
\nThe country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities.
\nAnother factor includes the high pressure faced by the government to privatise state-owned enterprises to meet requirements under signed trade pacts, especially the EU \u2013 Vietnam Free Trade Agreement, which is expected to come into force in 2019.
\nEncouraging signs for foreign investment include:
\n\u2022\tReformed policies to allow wider access to foreign investors.
\n\u2022\tASEAN Economic Community single market and production base.
\n\u2022\tThe conclusion of free trade agreements (FTAs), including the EU \u2013 Vietnam FTA and The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
\n\u2022\tVietnam\u2019s super rich population is growing faster than anywhere else and is on track to continue leading the growth in the next decade.
\n\u2022\tEquitization of state-owned enterprises will speed up.
\nThe introduction of the new Investment Law, Enterprise Law, Resolution No. 42 on handling bad debts and other laws and policies are creating an improved legal environment for investment and trade in general, and the M&A market in particular. However, the following factors also affect M&A transactions:
\n\u2022\tDivergent interpretations and implementations by local licensing authorities of international treaties such as Vietnam’s WTO Commitments.
\n\u2022\tDifferent licensing procedures applied to different types of transactions (for example, for foreign invested companies and domestic companies, public companies and private companies, and for buying state-owned shares or private shares).
\nAlthough legal and governance barriers, along with macro instability and the lack of market transparency are still the greatest concerns for investors, M&A deals in Vietnam are still expected to be one of the key, effective channels for market entry.
\nThe major expected trends in the Vietnam M&A market include:
\n\u2022\tBank restructurings.
\n\u2022\tAcquisitions and anti-acquisitions, particularly in the real estate sector.
\n\u2022\tGrowing Japanese and Thai investment in Vietnam through M&A transactions.
\n\u2022\tReform of SoEs.
\n***
\nPlease do contact the author Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam.<\/p>\n","protected":false},"excerpt":{"rendered":"
Largest \/ most noteworthy public M&A transactions in the past 12 months Oil gas and chemicals In May 2017, Earth Chemical bought 100% stake in A My Gia Joint Stock Company at about USD79.2 million. Financial In July 2017, Vietnam International Joint Stock Commercial Bank bought 100% business of Commonwealth Bank of Australia (Ho Chi … <\/p>\n