Foreign packaging enterprises increase presense in VN via M&A
Multiple foreign enterprises have acquired large packaging companies in Vietnam, with the ambition to expand their presence in the country.
Thai giant SCG Group is one of the leading businesses in Southeast Asia. The Group is also among the earliest foreign investors with a presence in Vietnam, right after the revised Foreign Investment Law took effect in 1992.
Compared to businesses from Europe, the Republic of Korea, and Japan, Thai corporations are considered to have some advantages, such as geographical location and cultural similarities. To date, SCG Group manages more than 20 subsidiaries in Vietnam, focusing on three main business segments: Cement - Building Materials, Chemicals and Packaging.
As for the packaging segment, SCG has been present for more than a decade and has accelerated since the second half of 2020. This group started with joint ventures but then expanded faster with mergers and acquisitions.
SCG's most famous M&A deals in the packaging industry include the acquisition of 80% of Tin Thanh Packaging, 94% of Bien Hoa Packaging or 70% of Duy Tan Plastics.
In 2015, TC plastic packaging company - a member company of SCG group - successfully acquired 80% of the shares of Tin Thanh Packaging Joint Stock Company (Batico).
The deal value, as well as Batico's production information, were not announced by SCG. Batico is a large soft plastic packaging manufacturing enterprise in Vietnam with about 20 years of experience.
In December 2020, TCG Solutions Pte Ltd, a member company of SCG Group, successfully purchased 12.1 million shares of Bien Hoa Packaging Joint Stock Company and owned 94.11% of this company's charter capital.
The deal value was approximately VND2.1 trillion.
Bien Hoa Packaging Company is one of the five largest packaging suppliers in the southern region, specialising in providing packaging for Unilever, Pepsico, and Nestle. This enterprise has three affiliated factories, a capacity of 100,000 tonnes per year, continuously achieving average growth of 20-25% per year.
On February 9, 2021, SCG announced the purchase of 70% shares of Duy Tan Plastic.
Duy Tan Plastic is one of the leading enterprises in the Vietnamese market for rigid plastic packaging products, with main customers being multinational companies and domestic FMCG businesses. Roughly 80% of Duy Tan’s products are sold in Vietnam, 20% are exported to the US and other markets.
In 2020, Duy Tan Plastics achieved revenue of VND4.7 trillion (equivalent to 6.1 billion baht), with total assets by the end of the year reaching VND5 trillion (6.5 billion baht). The annual capacity of this business is 116,000 tonnes of rigid plastic packaging and household plastic products.
Nguyen Van Dong, chairman of the Printing Association, said that recently there has been a phenomenon of printing and packaging businesses from Asian countries looking for investment and business opportunities in Vietnam.
The demand for printing and packaging will increase as industrial production increases. This is an opportunity but also puts great pressure on the competitiveness of Vietnamese businesses operating in the industry, Dong said.
According to Dong, foreign businesses will invest in production in Vietnam, even buying a majority of shares in domestic businesses to take advantage of available factories, technology and skilled labor force to quickly participate in the market.
