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Serving up an M&A feast

Share this on Aug 22, 2017 11:28:12

Serving up an M&A feast

Nguyen Quynh Lan, managing director of the Business Information Unit at data and business information provider StoxPlus, said food and beverage is the sector of greatest interest to foreign investors for mergers and acquisitions (M&As), with a total deal value of more than $1.4 billion in 2016. Most of the active acquirers are from Singapore and Thailand.


More foreign investors are looking to enter Vietnam’s food and beverage market, especially via mergers and acquisitions.

According to Ly Kim Chi, chairwoman of the Ho Chi Minh City Food and Foodstuff Association, many long-standing and prestigious brands in Vietnam’s food sector have been acquired. 

The association recorded a large number of its member firms being acquired by foreign players, a trend that is forecast to rise in the coming time. Some Vietnamese firms sold their business because they are less competitive than their foreign counterparts in the increasingly integrated global market. However, this does not mean that they went for fire-sale prices. In fact, some firms have been acquired for more than their real-world valuation.

Chi said that foreign investors are interested both in Vietnam’s developing consumer market, and as a gateway market for foreign firms to enter the ASEAN market – a bloc with more than 600 million consumers.

Nguyen Quynh Lan, managing director of the Business Information Unit at data and business information provider StoxPlus, said food and beverage is the sector of greatest interest to foreign investors for mergers and acquisitions (M&As), with a total deal value of more than $1.4 billion in 2016. Most of the active acquirers are from Singapore and Thailand.

She noted that Singaporean investors are very active in the Vietnamese market, with 55 deals being struck in 2016 at a total value of over $1 billion. Food and beverage is the most attractive sector to Singaporean firms. However, a lot of deals by Singapore-based companies are from offshore funds or private equity funds.

In 2016, the biggest deal from Singapore was that of F&N Dairy Investments Pte., Ltd., when it purchased a Vinamilk stake from the State Capital Investment Company (SCIC). F&N Dairy Investments belongs to Singapore-based Fraser & Neave, owned by Thai billionaire Charoen Sirivadhanabhakdi.

Korean investors also had some notable M&A deals, such as CJ and Daesang purchasing shares in Cau Tre Foods and Duc Viet Foods, respectively.

Leading global investment firm KKR recently completed its $250 million investment in Masan Group – in particular, in its branded meat products, Masan Nutri-Science. The transaction makes KKR the second-largest foreign shareholder of Masan Group – after the stake owned by GIC Private Limited – as well as the largest outside shareholder of Masan Nutri-Science.

At the end of 2016, Masan took the first step to serve ASEAN consumers by launching Chin-su Yod Thong fish sauce in Thailand. The plan was aided by Thai giant Singha Beer, which bought in heavily to Masan subsidiaries in 2015, at a total price of $1.1 billion.

More newcomers are looking for opportunities to penetrate the Vietnamese market. Australia’s Carlton & United Breweries (CUB) is currently eyeing the Hanoi Beer, Alcohol and Beverages Corporation (Habeco) and Saigon Beer, Alcohol and Beverages Corporation (Sabeco).

Meanwhile, Taiwan Tobacco and Liquor Corporation (TTL), the largest tobacco and liquor company in Taiwan, is on track to enter the Vietnamese market soon. The firm has plans to distribute beer products in Vietnam by hiring a Vietnamese brewery to manufacture its products, and to develop its own brewery in the country at a later time.

According to market research provider Euromonitor International, Vietnamese drinkers are expected to consume a total volume of 3.88 billion litres of beer this year, up from 3.64 billion litres in 2016. Among brewers, Sabeco is Vietnam’s leading beer manufacturer, with 40.9 per cent market share, followed by Heineken, Habeco, Carlsberg, and Sapporo, respectively.

As Vietnam’s food and beverage industry picks up, around 500 businesses from 20 countries and territories will be gathering at Vietfood & Beverage – ProPack 2017 at the Saigon Exhibition and Convention Center from August 9-12. There will be around 600 pavilions from Taiwan, Poland, Malaysia, Thailand, Korea, and China, showcasing their products with a view to exploring the domestic market, finding local distributors, and setting up businesses in Vietnam.

Source: VIR