M&A Vietnam may see record number of M&A deals in 2016

Foreign investors’ high interest in the consumer goods sector which has been growing very rapidly in recent years is believed to help boost merger & acquisitions (M&A), according to VnExpress.

The number of reported M&A deals in 2015 was 40 percent higher than in 2014 with total value of $4.3 billion, and higher than 2012 when the value reached a record high of $4.2 billion

The number of reported M&A deals in 2015 was 40 percent higher than in 2014 with total value of $4.3 billion, and higher than 2012 when the value reached a record high of $4.2 billion, according to IMAA, a research institute of M&A.

Nguoi Dong Hanh quoted an analyst as commenting that 2015 was in the middle stage of the second M&A wave in 2014-2018.

The figure is expected to be even higher in 2016, when free trade agreements (FTAs) take effect and the government removes barriers to investments, according to Baker & McKenzie and Duane Morris.

Baker & McKenzie’s Fred Burke said on Bloomberg that it was getting easier to do M&A in Vietnam and under such conditions, the M&A market would become busier.

Analysts commented that foreign companies are attracted by the predicted GDP growth rate of 6.7 percent in 2016, a 9-year high, and by the country’s large market with high population, with 60 percent aged under 35.

A lot of big M&A deals have been announced recently. Boon Rawd Brewery, the Thai oldest brewery poured $1.1 billion into Vietnam’s Masan Group. Meanwhile, ANA Holdings from Japan has agreed to spend $109 million to acquire a stake in Vietnam’s Airlines.

Meanwhile, CafeF quoted its sources as saying that M&A activities in 2016 would mostly be in the consumer goods sector.

In fact, the M&A in the sector has been busy over the last two years. Anticipating the ASEAN Economic Community (AEC) in late 2015, foreign investors, especially ones from ASEAN, have been flocking to Vietnam to purchase Vietnamese businesses.

Thai investors are the biggest buyers in the plastics industry. Experts noted that the common aspect in many deals where Thai investors got involved was that they tended to buy Vietnamese plastics manufacturers.

“Thai partners raised some questions about the current profits and the expected profits in the next 10 years and then offered to buy at ‘very satisfactory prices’,” said Tran Viet Anh, deputy chair of the HCM City Rubber & Plastics Association.

Vietnam has also seen a lot of M&A deals in the retail sector as well. Ha Noi Moi reported that Central Group bought 49 percent of Nguyen Kim’s shares, a home appliance distributor, while AEON acquired 30 percent of Fivimart and 49 percent of Citimart. Meanwhile, Vingroup has bought 80 percent of Giang Vo Exhibition Center and 100 percent of Vinatexmart.