Two problems with m a activity on the stock market

Two problems with M & A activity on the stock market

11:40:46 | 27/05/2010

M & A Vietnam is the largest forum in the year of purchase and merger of enterprises in Vietnam by the Ministry of Planning and Investment, Vietnam Investment Review and co-organizer Avalue.
If the conference for the first time in 2009 has clarified some issues related to M & A of the enterprise as legal basis, the opportunities of businesses, some lessons from M & A. .., it took Vietnam Forum 2010 entitled "Towards the successful business" continues to provide useful information related to M & A sector in many advanced topics. Prospect and M & A securities market is a subject analysts are pretty concerned.

"Fall" emerging M & A

M & A activity among listed companies in Vietnam took place only through two main forms are offered for public purchase and merger of companies through share swaps. Typically some typical recent deal, such as Ha Tien 1 Cement Joint Stock Company (HT1) issued 88 million shares to make acquisition through the entire capital of the swap Joint Cement Ha Tien 2 ( HT2) or the CTCP Mirae (KMR) issued 14 million shares to buy the whole implementation of the Joint Capital Mirae Fiber (KMF) through stock swaps ... Recently, the Shareholder agrees NKD and M KIDO the two companies entered into Joint Kinh Do (KDC), Saigon Joint Shareholders - Saigon (SGT) has approved a report on merger guidelines in the General Corporation Joint Development Kinh Bac (KBC) ...

Entering 2010, the first stock market also sees new shades of M & A activity, which is the publicly bid: JSC of Phu Nhuan Gold and Silver (PNJ) offered to buy 2.1 million shares of the Joint Nature Data Saigon (SFC), Hung Vuong Joint Fisheries (HVG) successful bid of 3.75 million shares of An Giang Fisheries Import Export Joint Stock Company (AGF) to turn into a subsidiary AGF.

Scores via M & A activity in the market over time, may see this activity for the companies listed is very limited in both quantity and value. Meanwhile, the business of high value pretty much takes place outside the market listing. March 2009, Viettel announced an agreement to buy 18.9% of the shares of Vinaconex to 20,000 VND / share, higher than the market value of shares Vinaconex same time about 15%. It is considered as successful because the deal after more than a year, this investment is to bring Viettel profits on the books is 100% (even in the peak of the VCG shares, Viettel interest 4 times) . Besides, Vinaconex is considered advantageous to have access to ample financial resources of Viettel.

On May 10/2009, HSBC signed an agreement to increase the proportion of stock held in Bao Vietnam from 10% to 18% with a value of approximately 105.3 million. This is considered the deal successfully with both. Bao Vietnam expectations get management experience, ability to manage risks from one of the leading financial institutions in the world. Conversely, network security status and Vietnam are helping HSBC can easily go ahead of other foreign competitors in the Vietnam market. On May 11/2009, House, Foods Corp - food group and Japan's leading drinks is about $ 20 million investment in Masan Group (MSN) through the acquisition of 9 million shares, worth about 40,000 VND / CP, high MSN than market value then of about 14%. Trade in value, though not large but is highlighted in the attraction of foreign capital during the crisis. Most recently, Masan also made Nui Phao project acquired from Dragon Capital, but the value of the agreement were not announced ...

Mr. Nguyen Ngoc The, deputy director of National Petroleum Corporation of Vietnam (EVN) said, on policy and PVN in 2010 will continue restructuring the Group towards affiliated companies focus on industry main job, reducing internal competition, strengthening external competitiveness. According to representatives of the Kinh, after the start of the Kinh and NKD Kido's merger into the company, Kinh Do will be right next year to plan further merger Vinabico. Further, Kinh Do will seek merger or acquisition of enterprises operating efficiency in the food sector.

Speaking at the seminar, Dr. Christompher Kummer, international experts on M & A forecasts, after the success of a number of M & A and many other companies would be interested and see this as a search engine of new growth. So next time, trading activities in Vietnam merger promises to continue to "make waves." His advice Christompher for enterprises of Vietnam is to conduct M & A focus on the areas of business and add to the industry core, if possible please expand sales mergers abroad to large companies and have strong regional positions.

Two problems posed

Mr. Seck Yee Chung, law firm Baker & Mc Kenzine reviews, the greatest obstacle to M & A activities in Vietnam is no legal framework for this activity separately. Currently, the regulations on M & A are scattered in many laws: the Law on Enterprises, the provisions on consolidation, merger, acquisition or stock in the legal system has invested some provisions related to the purchase, sale, transfer ... recognized M & A activity as a form of investment

immediate competition law also made provisions important to M & A, as acts in restraint of competition, the monopoly .... Many documents but lack a legal document or a direction result in uniform.

Agree with this view, Mr. Hai, general director of Vietnam Securities The additional provisions on M & A in Vietnam there is still tilted against the international level. This puts both companies, management agencies in the state is not ready. So the sale, merger today as a single new case, not to expect much in the explosion of large-scale business on a large scale.

Actual time, the cases M & A success HT2 in HT1, KMF on KMR or NKD, KIDO at KDC will bring in common is a similarity in the relationship property between the major shareholders, so post-merger issues no big problem. Mr. von Hai for the sale between the two companies merged as a marriage when two companies merged as the unified contract marriage. Later, the "family" that is happiness or not depends very heavily on post-merger cultural enterprises.

Le Nhi Nang, deputy director of HOSE mentioned cases Kinh acquirer Tribeco (TRI) as a typical case. In 2005, KDC quietly raise the percentage of shares owned TRI and suddenly declared ownership rate reached 35% of the shares in the surprise leaders of the TRI. The "forced marriage" was not reluctant to improve the business situation of the TRI, but also expected the company goes down then: two consecutive years from 2008 to 2009, TRI accumulated losses of more than 230 billion. This is a lesson to owners of new and old board could not find a common language.

Dr. Christompher Kummer, according to statistics, the world's only 25% of M & A goal can be achieved, 60% had no clear results and 15% bad results. So, M & A is the shortest way to find new growth engines, but not the way businesses have done in Vietnam at all costs.

Currently, M & A activities in Vietnam is mainly done through the advice of the Securities. However, the principal advisory nature of the construction documents and implementation procedures with the authorities. Advisory function is really related to strategy development, business organizations and arrangements after the merger was hardly mentioned. The sales records of the merger was almost not released the numbers to accurately assess the degree of focus of the company after the merger. Thus, compared with M & A took place in the world, we find that M & A in Vietnam between companies listed only in the preliminary, the business just started, the level of participation related parties have not deep. However, with conditions increasingly favorable stock market, the demand growth of increasingly urgent business, this activity will certainly be a strong trend in the market in the near future.

Source: Investment securities e