M&A compress to boom during pandemic

17-Oct-2020 Intellasia | Dien dan Doanh nghiep | 6:02 AM Print This Post

Many businesses see mergers and acquisitions (M&A) in the COVID-19 pandemic as an opportunity to acquire, eliminate competitors, and speed up new investments. But for some parties, this is also the danger of disappearing without a trace, selling yourself cheaply, or losing the conditions for M&A…

Opportunities for ecosystem expansion

The two opposite states make the M&A market look like an “underground iceberg” that underneath, the excitement still takes place despite the epidemic in Vietnam. If not during the pandemic and in the context of the consumer goods market, health care continues to be the area of purchasing power, people spend the most time, then the detergent NET M&A deals and expand from pork into the poultry segment of two Masan Group member companies, will not cause much attention.

NET detergent is handed over to Masan HPC a 100 percent owned subsidiary of Masan, at a cost of about 557 billion dong, equivalent to 52 percent of the shares and net valuation of about $46 million. This deal follows Masan Consumer in purchasing the Vinmart supermarket system, just a few of the deals that have been made and will be done for Masan to complete its large ecosystem and integrate more and more products. Large, ecological generation waterfall advantages are available. Poultry investment by pouring 613 billion dong into 3F to own 51 percent of the poultry meat company of Masan MeatLife, another member of Masan, is quite similar.

Also, in order to improve the ecosystem, but following the internationalisation chain, VinFast, after purchasing the entire GM Vietnam system, moved to establish VinFast Engineering Australia, located in HCM City. Melbourne and recruited a host of managers there such as Shaun Calvert GM’s vice President of global engineering and manufacturing from 2001 to 2017. Many senior staff have more than 20 years of working experience with Holden and general Motors have joined VinFast as well. This is seen as a preparation to pave the way for M&A, where a major deal is Holden and GM Australia. According to local media in the midst of the epidemic, VinFast may have spent $20 million to own Lang Lang as Holden’s large-scale vehicle testing centre, from the perspective that Australia is a growing car market with a high level of expertise that VinFast wants to exploit.

Of course, in the context of many automakers having to narrow their operations, many manufacturers have to go bankrupt, if VinFast does M&A in the international market, this is an important time, property prices may be cheap. More and more valuable business prestige gives the springboard to enter the global auto market, something that VinFast cherishes.

The latest Euromonitor report calculated the investment indexes of 50 countries with more than 150 areas around the world. This figure reflects the level of investment expectation, market performance and attractiveness. Accordingly, this report shows that Vietnam is an attractive, dynamic and potential M&A market with the second highest score after the US. Even Euromonitor also forecasts that Vietnam will hold second place in the top 20 countries with the highest M&A investment index in 2021, surpassing China, Indonesia and only behind the US.

While the driving force of M&A deals in Vietnam comes from Western businesses withdrew from China to avoid the risks of the US-China trade war. Notable destinations for these companies are Vietnam, Indonesia, Spain and Finland. On the US side, it should be remembered that in 2020, together with the sell-off wave impacted by the COVID-19 pandemic, the US-China trade war on the side of the decisions that focused on the region, the technology sector, also caused the trade. “terrorist” value M&A with global influential brands is put on the table.

Breaking, compressing M&A

Not everyone has a lot of money, big instant jobs like Masan or VinFast in Vietnam, or the tech giants whose numbers are counted on 5 fingers who are doing deals are of historical significance.

And it is a fact that the cautiousness of many buyers’ partners has also been swept by the fierce epidemic of COVID-19, making many deals unfinished. deputy general director of an audit firm specialising in M&A consulting, said that in Vietnam, most investors have been very cautious with large purchases and investments in M&A. Only in areas where the impact of the pandemic does not blow or the risks are low, investors still see clearly the prospects when the economy recovers, but “sure” is the consumer goods, healthcare sector. strong then the new M&A is strong.

He also revealed that a lot of the deals are in the process of negotiation and may end this year, but due to COVID-19, the parties have been delayed.

However, many opportunities have also been coming to market repositioning, especially the great opportunity for Vietnam from bilateral and multilateral Trade Partnership Agreements, making Vietnam look attractive. Financial expert Nguyen Le Ngoc Hoan said that German Reconstruction Bank through DEG fund, spent a lot to buy high-priced shares and convertible bonds of HDBank as a strategic partner, shows that investors Financial Europe has also been looking for a new path in the market of 100 million people. Previously, some European banks entered Vietnamese credit institutions such as BNP Paribas, Standard Chartered Bank, and HSBC and then left or set up branches with 100 percent foreign capital locally, now the reappearance of the bank. German products the gateway to the European market in Vietnam, have given a green signal of a new prospect or wave of M&A in the financial sector, leading to an opportunity to shake hands with European and Vietnamese businesses.

The low interest rate policy that is being maintained at central banks in other countries as well as in Vietnam, according to experts, is also a condition to increase the “reward” for investors who still have the resources to borrow low interest rate capital to execute buy shares, buy assets, M&A. Besides, similar to the US market, Vietnam also has a lower level of excitement. And it could happen outside of Vietnam, like in the case of Gojek and Grab to then spread the effect to domestic.

Therefore, experts believe that in 2020, the basic M&A market is still difficult to decline in value. This is consistent with the complex economic context in the pandemic. Reducing the number of successful deals, if they take place, will create the compression needed for M&A activity to explode again, along with an overall recovery.

 


Category: Business, Vietnam

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