Thirst for land speeds up M&A deals

Large conglomerates in Vietnam have been quietly trying to buy rival companies or all or part of businesses because they want the companies' land.

Many shareholders at the 2016 shareholders’ meeting of Hoang Anh Gia Lai Group were surprised when Doan Nguyen Duc, the group’s president, spoke about a plan to buy Dong Duong Rubber Company in the context of a fall in ‘white gold’ prices.

Hoang Anh Gia Lai has 80,000 hectares of land for agricultural production, but this is not enough to satisfy it. Though facing difficulties because of the rubber price plunge, the board of directors still consults with shareholders about a plan to take over Dong Duong.

 thirst for land speeds up m&a deals hinh 0
On the sidelines of the meeting, Duc said in order to boost agricultural production, which is now the group’s core business field, Hoang Anh Gia Lai needs clear land fund with high quality and low prices to expand cultivation and farming.

Duc understands that the rubber price is on the decrease and Hoang Anh Gia Lai is restricting rubber growing to avoid losses. 

Therefore, the group, when planning to buy Dong Duong, does not aim to develop rubber. 

“We target Dong Duong because we can see the cheap land which has a price lower than the market price. This would bring profit, even if we don't use it for cultivation or for reselling,” he said.

The plan to take over Dong Duong received support from shareholders.

Another merger & acquisition (M&A) deal of this kind was made by Vingroup.

In Vietnam, Vingroup is known for its imposing real estate projects and recent investments in agricultural production. However, some sources said Vingroup is going to buy stakes of a book company – Savina.

Experts said that if the VND463 billion takeover deal succeeds (Vingroup plans to buy 44 million shares, or 65% of Savina’s chartered capital at VND10,500 per share), Vingroup will have opportunities to approach a large land fund comprising six projects.

Savina has a head office located on the most expensive street in Hanoi, near the Trang Tien Shopping Mall in the central business district of Hoan Kiem.  It manages a land fund of tens of thousands of square meters in many different places.

A series of other M&A deals have been made so far this year. BRG bought a 70% stake of Sedona Suites Hanoi from Keppel Land Vietnam at US$31.5 million. 

ThaiGroup, through an auction, bought stakes of Kim Lien Tourism from SCIC (the State Capital Investment Corporation) to obtain the right to exploit the 3.5 hectares of prime real estate in Dong Da district. 

Vietnamnet

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