Big foreign investors are closely monitoring M&As in Vietnamese consumer goods M&As following the dramatic financial successes of investments in dairy giant Vinamilk (VNM), food processor Masan Group (MSN), confectionery producer Kinh Do Corp (KDC), and Golden Gate (owner of famous restaurant chains like Ashima, Kichi Kichi, and Sumo BBQ).
According to many experts, the strong growth of M&A deals in Vietnam is not unusual. The weaknesses of many Vietnamese firms have been exposed by the economic crisis. They have potential but lack management experience and development strategy. These companies are attractive M&A targets for foreign investors looking to exploit generally low prices, experts said.
Hoang Tung, founder and manager of Pizza Home Company, concurs more M&A deals will manifest in the consumer goods sector this year.
"It always takes time to develop a distribution system in the consumer goods sector and M&As are an effective shortcut," Tung said, noting famous brands like Burger King, Subway, Domino's, Starbucks, and McDonald's all have plans to enter the Vietnamese market.
With large inventories exacerbated by poor liquidity, and the Government plans to restrict real estate companies from loans extended to homebuyers, weak domestic property companies intent on survival could be forced into selling properties to external partners.
HCM City Real Estate Association Chairman Le Hoang Chau said Vietnam's real estate market has been on the potential investment list of many foreign corporations since early 2012 year and 2013 could see the beginnings of capital disbursement.
Andy Ho, managing director and head of investment at VinaCapital, has a different view. The Phap Luat Thanh Pho Ho Chi Minh newspaper reports he advises M&A investors to refrain from purchasing individual projects and instead buy all the targeted companies’ assets via the stock market.
"Considering the stock market’s current dismal atmosphere, real estate company shares were being traded under their actual value (including their projects)," Ho said.
In November, VinaCapital put a 50 percent stake in the Hanoi-based five-star hotel Metropole up for sale. It promises to be a notable deal in the property market this year.
The last days of 2012 saw a major development in the banking sector, with the Japanese Bank of Tokyo Mitsubishi UFJ paying US$743 million for a 20 percent stake in Vietinbank (CTG).
The financial sector also attracts some foreign interest but M&As are more onerous because of mandatory restructuring commitments and the required Government approval.