VietNamNet Bridge – Accepting to pay 30-50 percent higher than the market prices, foreign investors have shown their strong determination to buy the stocks of Vietnamese enterprises now, when the stock prices are at the deepest low.

The Japanese Tokyo Mitsubishi Bank has agreed to pay US$743 million to buy 20 percent of stakes of Vietinbank, one of the biggest commercial banks in Vietnam, the biggest ever merger & acquisition affair so far in the finance and banking sector.

President of Vietcombank Pham Huy Hung said the Japanese partner paid VND24,000 dong per share, while the closing price was VND20,300 dong per share on December 26, 2012. At the first trading session of the new year on January 3, Vietinbank shares were traded at VND20,900 per share. The foreign partner affirmed that Vietinbank is the most reasonable choice for it, while clearly stating that it does not intend to make investment in any other banks in Vietnam.

Another big deal was made in September 2012, when 10 percent of stakes (14 million shares) of Kinh Do group, a sweets giant were transferred to Ezaki Glico, a Japanese investor at the price which was 1.7 times higher than the market price.

Kinh Do group once succeeded in buying the Wall ice cream factory from Unilever, but it was very cautious with the plan to sell stakes. The deal brought VND700 billion dong to Kinh Do.

As for the business cooperation, Kinh Do would act as the exclusive distributor of some trademarks of Ezaki Glico in Vietnam.

Tran Le Nguyen, General Director of Kinh Do Group, has affirmed that the enterprise does not intend to sell shares to any other partners.

The fact that foreign investors accept to pay high for Vietnamese shares has made Vietnamese businesses shrink away and rethink their share sale plan.

Habeco, a brewery manufacturer in Hanoi, though having decided to sell more stakes to Carlsberg Breweries A/S as requested by the foreign partner, still has got a bit puzzled.

Carlsberg Breweries A/S now holds 16 percent of Habeco’s capital and plans to raise its ownership ratio in the Vietnamese company to 30 percent. Habeco shares are now traded at VND25,000-28,000, while Carlsberg has promised to pay VND50,015.

If the deal succeeds, Habeco would earn VND1507 billion. However, the high prices are still not enough to persuade Habeco’s shareholders to wrap up the deal.

Some analysts have pointed out that once obtaining 30 percent of stakes in Habeco, Carlsberg Breweries A/S would have the chance to control the Vietnamese brewery market. The foreign brand has successfully taken over Hue Brewery, while holding 60 percent of stakes in Halida, 55 percent in Hanoi-Vung Tau and 30 percent in Ha Long.

Vietnamese seafood companies have also looking for foreign partners. However, most of them still hesitate to make deals. Except Go Dang JSC which has sold 49 percent of stakes to a foreign investor and decided to delist, other companies including Minh Phu Group, still is in two minds about the stake sale.

Minh Phu once planned to sell 30 million stakes to foreign partners. However, it recently has refused a foreign partner from Thailand - Charoen Pokpand Foods (CP Foods), even though the foreign company accepts to pay VND50,000 per share, which is double the current market price.

Meanwhile, Nguyen Viet Duc, a senior executive of the SHF, an investment fund, said it is quite normal that investors have to accept to pay higher than the market prices, about 30 percent higher, because they buy stakes in big quantities.

VNE